S-1

As filed with the Securities and Exchange Commission November 25, 2015

Registration Statement No. 333-_____________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ZONED PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Nevada	6799	46-5198242
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

14300 N. Northsight Blvd., #208

Scottsdale, AZ 85260

Phone: (877) 360-8839

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Bryan McLaren, President

Zoned Properties, Inc.

14300 N. Northsight Blvd., #208

Scottsdale, AZ 85260

Phone: (877) 360-8839

(Name, address and telephone number of agent for service)

Copies to: Laura Anthony, Esq.

Legal & Compliance, LLC

330 Clematis Street, Suite 217

West Palm Beach, FL 33401

Phone: (800) 341-2684

Approximate date of proposed sale to public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering: ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier registration statement for the same offering: ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered (1)		Proposed Maximum Offering Price per Share		Proposed Maximum Aggregate Offering Price (2)		Amount of Registration Fee
Common Stock, par value $0.001, by Selling Stockholders		1,351,915	$	8.00	$	10,815,320	$	1,089.10

(1)

Represents outstanding shares of common stock offered for resale by certain selling stockholders listed herein. In the event of stock splits, stock dividends or similar transactions involving the common stock, the number of common shares registered shall, unless otherwise expressly provided, automatically be deemed to cover the additional securities to be offered or issued pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended.

(2)

Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933, as amended.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2015

ZONED PROPERTIES, INC.

1,351,915 Shares of Common Stock

This prospectus relates to the potential resale by certain selling stockholders of up to an aggregate of 1,351,915 shares of our common stock, par value $0.001 per share. These shares shall be sold at a fixed price of $_______ per share. This prospectus may be used by the selling stockholders named herein to resell, from time to time, those shares of our common stock included herein. For information about the selling stockholders see “Principal and Selling Stockholders” on page 12.

We will not receive any proceeds from the resale of the shares offered by the selling stockholders. The selling stockholders, and any participating broker-dealers, may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and any commissions or discounts given to any such broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock. We will be responsible for all fees and expenses incurred in connection with the preparation and filing of the registration statement of which this prospectus is a part; provided, however, that we will not be required to pay any underwriters’ discounts or commissions relating to the securities covered by the registration statement.

Our common stock is quoted on the OTC Markets Group, Inc.—OTC Pink Current Information marketplace (“Pink Sheets”) under the symbol “ZDPY.” In the near future, we intend to apply to transfer the quotation of our common stock from the Pink Sheets to the OTCQB® marketplace. If we apply to have our common stock quotation transferred to the OTCQB® marketplace, there is no assurance that the application will be approved. There have been minimal recent public quotations of our common stock on the Pink Sheets. There has never been an active public market for our common stock, and the shares are being offered in anticipation of the development of a secondary trading market. On October 27, 2015, the closing sale price of our common stock on the Pink Sheets was $15.50.

We are an “emerging growth company” as defined in the Securities and Exchange Commission (“SEC”) rules and we will be subject to reduced public reporting requirements. See “Emerging Growth Company and Smaller Reporting Company Status.”

Persons effecting transactions in the shares should confirm the registration of these securities under the securities laws of the states in which transactions occur or the existence of applicable exemptions from such registration.

INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN OUR SECURITIES.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

You should rely only on the information contained in this prospectus. We have not, and the selling stockholders have not, authorized anyone to provide you with different information from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstances under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus.

The date of this prospectus is _____________, 2015.

TABLE OF CONTENTS

	Page
PROSPECTUS SUMMARY	1
RISK FACTORS	4
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	12
DETERMINATION OF OFFERING PRICE	12
USE OF PROCEEDS	12
PRINCIPAL AND SELLING STOCKHOLDERS	12
PLAN OF DISTRIBUTION	18
DIVIDEND POLICY	19
DESCRIPTION OF SECURITIES	19
DESCRIPTION OF THE BUSINESS	21
LEGAL PROCEEDINGS	27
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	28
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29
MANAGEMENT	40
EXECUTIVE COMPENSATION	42
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	43
LEGAL MATTERS	45
EXPERTS	46
DISCLOSURE OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	46
WHERE YOU CAN FIND MORE INFORMATION	46
INDEX TO FINANCIAL STATEMENTS	F-1

No dealer, salesperson or other individual has been authorized to give any information or to make any representation other than those contained in this prospectus in connection with the offer made by this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the selling stockholders. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs or that information contained herein is correct as of any time subsequent to the date hereof.

For investors outside the United States: We have not, and the selling stockholders have not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside the United States.

PROSPECTUS SUMMARY

The following summary highlights material information concerning our business and this offering that is contained elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in the securities. Before making an investment decision, you should read the entire prospectus carefully, including the “Risk Factors” section, the consolidated financial statements and the notes to the consolidated financial statements. If you invest in our common stock, you are assuming a high degree of risk. As used throughout this prospectus, unless the context otherwise requires, the terms “Zoned Properties,” “Company,” “we,” “us,” or “our” refer to Zoned Properties, Inc. and its wholly owned subsidiaries, Tempe Industrial Properties, LLC, Gilbert Property Management, LLC, Green Valley Group, LLC, Kingman Property Group, LLC, Chino Valley Properties, LLC, Zoned Oregon Properties, LLC, Zoned Colorado Properties, LLC, and Zoned Illinois Properties, LLC.

The Company

We believe that the traditional commercial real estate industry is being transformed by many factors that can be characterized as “mega trends.” These trends include technological changes, shifting demographics resulting in a greater influence of millennials and social changes. The utilization of commercial property for retail, business and education is being affected by engagement through digital means as opposed to physical means. As a commercial property, project development and management services company, our mission is to identify, develop, and manage properties, initially for the medical marijuana industry and, as our operations develop, for other emerging industries. Our strategy, which is aligned with the shifting trends of the market, can position us to create property value and enhanced cash flow from rents leveraging our expertise in zoning, permitting, security, energy efficiency, waste and water remediation and sustainable design.

In order to drive value creation, one of mega trends we have focused on with respect to commercial properties that can be acquired and potentially zoned and permitted for specific development purposes, has been the emergence on a state-by-state basis of licensed medical marijuana dispensaries and cultivation facilities. We are focusing on commercial real estate development in this space to derive value from the new and emerging medical marijuana industry without directly participating in the cultivation, distribution, or sale of medical marijuana products.

The core of our business involves identifying and developing properties that exist within highly regulated zoning regions and may be candidates for re-zoning. This is an essential aspect of our overall growth strategy and value creation because we target specifically zoned properties that can be developed as candidates for specific industry operators. Once the properties have been acquired, adequately zoned and permitted, the opportunity to increase their value becomes substantially greater as a result of above market rents, as the demand for these properties within the specific zoning region increases.

We focus on acquiring properties that have the potential to increase significantly in value and use a variety of development strategies to build long-term growth. We have established a network of experts in the fields of real estate, design, construction, operations, and management in order to provide clients and prospective tenants with these development strategies to best meet their needs. We require all of our clients and prospective tenants to go through extensive due diligence in order to be what we consider to be highly sophisticated, credit worthy and experienced operators.

We currently maintain a portfolio of properties that we own, lease, and manage. In addition, we provide direct consultation and support for the development of each property. Development can range from complete architectural design and subsequent build-out, utility installation, property management, facilities management, and state of the art security systems.

There are significant challenges that exist when zoning, permitting, and constructing facilities associated with the medical marijuana market. Each state and jurisdiction adopts a set of specific zoning and permitting regulations. We have gained valuable knowledge and experience in this area by successfully completing four major projects in the state of Arizona, a highly regulated market. We believe we can replicate this business model in other states as markets mature and tighter regulations are established.

Our vision is to be recognized for creating the standard in property development for emerging industries, while increasing community prosperity and shareholder value. We believe that a focus on real estate and the development of properties will bring value to the local communities and all of our stakeholders. While we intend to expand into a variety of emerging industries, our current focus is on developing projects within the emerging medical marijuana industry.

Our common stock is quoted on the Pink Sheets under the symbol “ZDPY.” The last reported per share sale price of our common stock on the Pink Sheets was $18.00 on September 30, 2015. In the near future, we intend to apply to transfer the quotation of our common stock from the Pink Sheets to the OTCQB® marketplace. If we apply to have our common stock quotation transferred to the OTCQB® marketplace, there is no assurance that the application will be approved.

In 2014, we effected a complete change in management. An entirely new Board of Directors was named, as was a new Chief Executive Officer. New management recruited and put in place includes a Chief Operating Officer, SEC counsel, transfer agent, auditor, and investor relations firm.

During the year ended December 31, 2014, we generated revenue of $467,914, including $140,527 from related parties, and had a net loss of $5,740,366. During the nine months ended September 30, 2015, we generated revenue of $923,065, including $625,370 from related parties, and had a net loss of $1,145,170. 

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Emerging Growth Company and Smaller Reporting Company Status

Emerging Growth Company

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of all of these exemptions.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this extended transition period.

We could be an emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Smaller Reporting Company

We also qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as a company with a public equity float of less than $75 million. To the extent that we remain a smaller reporting company at such time as we are no longer an emerging growth company, we will still have reduced disclosure requirements for our public filings, some of which are similar to those of an emerging growth company, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

Corporate Information

Our principal executive offices are located at 14300 N. Northsight Blvd., #208, Scottsdale, AZ 85260, and our telephone number is (877) 360-8839. Our corporate website address is www.zonedproperties.com. Information on, or accessible through, our website is not a part of, or incorporated by reference in, this prospectus.

Summary of the Offering

Common stock outstanding before the Offering	17,060,250 shares
Common stock offered by the selling stockholders	1,351,915 shares
Common stock to be outstanding after the Offering	17,060,250 shares

Offering price per share	$________ (for the duration of this offering). See “Determination of Offering Price” and “Plan of Distribution.”
Use of proceeds	We will not receive any proceeds from the sale of common stock by the selling stockholders in this offering. See “Use of Proceeds” and “Principal and Selling Stockholders.”
Risk factors	Investment in our common stock involves a high degree of risk.  You should read the “Risk Factors” section of this prospectus beginning on page 4 of this prospectus for a discussion of factors that you should consider carefully before deciding to invest in our common stock.
Pink Sheets Symbol	ZDPY

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SUMMARY HISTORICAL FINANCIAL DATA

The following tables set forth, for the periods and as of the dates indicated, our summary historical financial data. The statements of operations data for the years ended December 31, 2014 and 2013 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The statements of operations data for the nine months ended September 30, 2015 and 2014 and the balance sheet data as of September 30, 2015 are derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements include, in the opinion of management, all adjustments consisting of only normal recurring adjustments, that management considers necessary for the fair presentation of the financial information set forth in those statements.

You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results are included for illustrative and informational purposes only and are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.

	Year Ended December 31,						Nine Months Ended September 30,
	2014			2013			2015			2014
							(unaudited)
Statement of Income Data:
Revenues:
Rental revenues	$	327,387		$	-		$	297,695		$	222,694
Rental revenues – related party		140,527			-			625,370			-
Total Revenues		467,914			-			923,065			222,694
Operating Expenses		5,947,862			571,236			1,899,644			5,005,048
Loss from Operations		(5,479,948	)		(571,236	)		(976,579	)		(4,782,354	)
Other Expense		260,418			220,769			(168,591	)		(203,546	)
Net Loss	$	(5,740,366	)	$	(792,005	)	$	(1,145,170	)	$	(4,985,900	)
Net Loss per Common Share	$	(0.72	)	$	(14.40	)	$	(0.06	)	$	(1.15	)
Weighted Average Shares Outstanding – Basic and Diluted		7,931,701			54,998			18,491,082			4,353,112

	September 30,		December 31,
	2015		2014
	(Unaudited)
Balance Sheet Data:
Total assets	$	9,118,851	$	9,861,508
Total liabilities	$	3,379,711	$	3,251,731
Total stockholders' equity	$	5,739,140	$	6,609,777

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should not invest in our stock unless you are able to bear the complete loss of your investment. You should carefully consider the risks described below, as well as other information provided to you in this prospectus, including information in the section of this prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements” before making an investment decision. The risks and uncertainties described below are not the only ones facing Zoned Properties. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Our Industry

Because we have limited operating history in the cannabis industry, we may not succeed.

We have limited operating history or experience in procuring, building out or leasing real estate for agricultural purposes, specifically marijuana grow facilities, or with respect to any other activity in the cannabis industry. Moreover, we are subject to all risks inherent in a developing a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with establishing a new business and the competitive and regulatory environment in which we operate. For example, the medical marijuana industry is new and may not succeed, particularly should the federal government change course and decide to prosecute those dealing in medical marijuana. If that happens there may not be an adequate market for our properties or other activities we propose to engage in.

You should further consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages. For example, unanticipated expenses, delays and or complications with build outs, zoning issues, legal disputes with neighbors, local governments, communities and or tenants. We may not successfully address these risks and uncertainties or successfully implement our operating strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment.

We may be unable to continue as a going concern if we do not successfully raise additional capital.

We may need to raise additional funds through public or private debt or equity financings, as well as obtain credit from vendors to be able to fully execute our business plan. If we are unable to successfully raise the capital we need, we may need to reduce the scope of our business to fully satisfy our future short-term liquidity requirements. If we cannot raise additional capital or reduce the scope of our business, we may be otherwise unable to achieve our goals or continue our operations. While we believe that we will be able to raise the capital we need to continue our operations, there can be no assurances that we will be successful in these efforts or will be able to resolve our liquidity issues or eliminate our operating losses. In addition, any additional capital raised through the sale of equity may dilute your ownership interest. We may not be able to raise additional funds on favorable terms, or at all. If we are unable to obtain additional funds or credit from our vendors, we will be unable to execute our business plan and you could lose your investment.

Because we may be unable to identify and or successfully acquire properties, which are suitable for our business, our financial condition may be negatively affected.

Our business plan involves the identification and the successful acquisition of properties, which are zoned for marijuana businesses, including cultivation and retail. The properties we acquire will be leased to licensed marijuana operators. Local governments must approve and adopt zoning ordinances for marijuana facilities and retail dispensaries. A lack of properly zoned real estate may reduce our prospects and limit our opportunity for growth and or increase the cost at which suitable properties are available to us. Conversely a surplus of real estate zoned for marijuana establishments may reduce demand and prices we are able to charge for properties we may have previously acquired.

Because our business is dependent upon continued market acceptance by consumers, any negative trends will adversely affect our business operations.

We are substantially dependent on continued market acceptance and proliferation of consumers of medical marijuana. We believe that as marijuana becomes more accepted the stigma associated with marijuana use will diminish and as a result consumer demand will continue to grow. And while we believe that the market and opportunity in the marijuana space continues to grow, we cannot predict the future growth rate and size of the market. Any negative outlook on the marijuana industry will adversely affect our business operations.

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In addition, it is believed by many that large well-funded businesses may have a strong economic opposition to the cannabis industry. We believe that the pharmaceutical industry clearly does not want to cede control of any product that could generate significant revenue. For example, medical marijuana will likely adversely impact the existing market for the current “marijuana pill” sold by the mainstream pharmaceutical industry, should marijuana displace other drugs or encroach upon the pharmaceutical industry’s products. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical marijuana movement. Any inroads the pharmaceutical could make in halting the impending cannabis industry could have a detrimental impact on our proposed business.

Because marijuana is illegal under federal law, we could be subject to criminal and civil sanctions for engaging in activities that violate those laws.

The U.S. Government classifies marijuana as a schedule-I controlled substance. As a result, marijuana is an illegal substance under federal law. Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law. The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana pre-empts state laws that legalizes its use for medicinal purposes.

As of September 30, 2015, 23 states and the District of Columbia allow its citizens to use medical marijuana. Additionally, Colorado and Washington have legalized cannabis for adult use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana. However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws. Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us and our shareholders.

Should such a change occur, our business operations would be affected. If our marijuana tenants are forced to shut their operations, we would need to seek to replace those tenants with non-marijuana tenants, who would likely expect to pay lower rents. Moreover, if the marijuana industry were forced to shut down at once, it would result in a high amount of vacancies at once and create a surplus of supply, driving leases and property values lower. Additionally, we would realize an economic loss on any and all improvements made to the properties that were specific to the marijuana industry and we would likely lose any and all investments in the U.S. market that were marijuana related.

In addition, although we do not intend to harvest, cultivate, possess, distribute or sell cannabis, by leasing facilities to growers of medicinal marijuana, we could be deemed to be participating in marijuana cultivation or aiding and abetting, which remains illegal under federal law, and exposes us to potential criminal liability, with the additional risk that our properties could be subject to civil forfeiture proceedings. Moreover, since the use of marijuana is illegal under federal law, we may have difficulty acquiring or maintaining bank accounts and insurance and our shareholders may find it difficult to deposit their stock with brokerage firms.

In an effort to provide guidance to federal law enforcement, the Department of Justice (the “DOJ”) has issued Guidance Regarding Marijuana Enforcement to all United States Attorneys in a memorandum from Deputy Attorney General David Ogden on October 19, 2009, in a memorandum from Deputy Attorney General James Cole on June 29, 2011 and in a memorandum from Deputy Attorney General James Cole on August 29, 2013. Each memorandum provides that the DOJ is committed to enforcement of the Controlled Substance Act (the “CSA”), pursuant to which a range of activities including cultivation and use of cannabis for personal use is prohibited, but the DOJ is also committed to using its limited investigative and prosecutorial resources to address the most significant threats in the most effective, consistent and rational way.

The August 29, 2013 memorandum provides updated guidance to federal prosecutors concerning marijuana enforcement in light of state laws legalizing medical and recreational marijuana possession in small amounts. The memorandum sets forth certain enforcement priorities that are important to the federal government:

● Distribution of marijuana to children;

● Revenue from the sale of marijuana going to criminals;

● Diversion of medical marijuana from states where is legal to states where it is not;

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● Using state authorized marijuana activity as a pretext of other illegal drug activity;

● Preventing violence in the cultivation and distribution of marijuana;

● Preventing drugged driving;

● Growing marijuana on federal property; and

● Preventing possession or use of marijuana on federal property.

In the event the DOJ reverses stated policy and begins strict enforcement of the CSA in states that have laws legalizing medical marijuana and recreational marijuana in small amounts, there may be a direct and adverse impact to our revenue and profits.

Laws and regulations affecting the regulated marijuana industry are constantly changing, which could materially adversely affect our proposed operations, and we cannot predict the impact that future regulations may have on us.

Local, state and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on its operations. In addition, it is possible that regulations may be enacted in the future that will be directly applicable to our proposed business. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

FDA regulation of marijuana and the possible registration of facilities where medical marijuana is grown could negatively affect the cannabis industry, which would directly affect our financial condition.

Should the federal government legalize marijuana for medical use, it is possible that the U.S. Food and Drug Administration (the “FDA”) would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. Additionally, the FDA may issue rules and regulations including cGMPs (certified good manufacturing practices) related to the growth, cultivation, harvesting and processing of medical marijuana. Clinical trials may be needed to verify efficacy and safety. It is also possible that the FDA would require that facilities where medical marijuana is grown be registered with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we do not know what the impact would be on the medical marijuana industry, what costs, requirements and possible prohibitions may be enforced. If we or our tenants are unable to comply with the regulations and or registration as prescribed by the FDA, we and or our tenants may be unable to continue to operate their and our business in its current form or at all.

We and our clients may have difficulty accessing the service of banks, which may make it difficult to contract for real estate needs.

On February 14, 2014, the U.S. government issued rules allowing banks to legally provide financial services to state-licensed marijuana businesses. A memorandum issued by the Justice Department to federal prosecutors re-iterated guidance previously given, this time to the financial industry that banks can do business with legal marijuana businesses and “may not” be prosecuted. The Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued guidelines to banks that “it is possible to provide financial services” to state-licensed marijuana businesses and still be in compliance with federal anti-money laundering laws. The guidance falls short of the explicit legal authorization that banking industry officials had pushed the government to provide and to date it is not clear what if any banks have relied on the guidance and taken on legal marijuana companies as clients. The aforementioned policy may be administration dependent and a change in presidential administrations may cause a policy reversal and retraction of current policies, wherein legal marijuana businesses may not have access to the banking industry. We could be subject to sanctions if we are found to be a financial institution and not in harmony with FinCEN guidelines. Also, the inability of potential clients in our target market to open accounts and otherwise use the service of banks may make it difficult for them to contract with us.

Because we buy and lease property, we will be subject to general real estate risks.

We will be subject to risks generally incident to the ownership of real estate, including: (a) changes in general economic or local conditions; (b) changes in supply of, or demand for, similar or competing properties in the area; (c) bankruptcies, financial difficulties or defaults by tenants or other parties; (d) increases in operating costs, such as taxes and insurance; (e) the inability to achieve full stabilized occupancy at rental rates adequate to produce targeted returns; (f) periods of high interest rates and tight money supply; (g) excess supply of rental properties in the market area; (h) liability for uninsured losses resulting from natural disasters or other perils; (i) liability for environmental hazards; and (j) changes in tax, real estate, environmental, zoning or other laws or regulations. For these and other reasons, no assurance can be given that we will be profitable.

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Because our business model depends upon the availability of private financing, any change in our ability to raise money will adversely affect our financial condition.

Our ability to acquire, operate and sell properties, engage in the business activities that we have planned and achieve positive financial performance depends, in large measure, on our ability to obtain financing in amounts and on terms that are favorable. The capital markets in the United States have recently undergone a turbulent period in which lending was severely restricted. Although there appears to be signs that financial institutions are resuming lending, the market has not yet returned to its pre-2008 state. Obtaining favorable financing in the current environment remains challenging.

Because we will compete with others for suitable properties, competition will result in higher costs that could materially affect our financial condition.

We will experience competition for real estate investments from individuals, corporations and other entities engaged in real estate investment activities, many of whom have greater financial resources than us. Competition for investments may have the effect of increasing costs and reducing returns to our investors.

Because we are liable for hazardous substances on our properties, environmental liabilities are possible and can be costly.

Federal, state and local laws impose liability on a landowner for releases or the otherwise improper presence on the premises of hazardous substances. This liability is without regard to fault for, or knowledge of, the presence of such substances. A landowner may be held liable for hazardous materials brought onto a property before it acquired title and for hazardous materials that are not discovered until after it sells the property. Similar liability may occur under applicable state law. Sellers of properties may make only limited representations as to the absence of hazardous substances. If any hazardous materials are found within our properties in violation of law at any time, we may be liable for all cleanup costs, fines, penalties and other costs. This potential liability will continue after we sell the properties and may apply to hazardous materials present within the properties before we acquire the properties. If losses arise from hazardous substance contamination, which cannot be recovered from a responsible party, the financial viability of the properties may be adversely affected. It is possible that we will purchase properties with known or unknown environmental problems, which may require material expenditures for remediation.

Because we may not be adequately insured, we could experience significant liability for uninsured events.

While we currently carry comprehensive insurance on our properties, including fire, liability and extended coverage insurance; however, there are certain risks that may be uninsurable or not insurable on terms that management believes to be economical. For example, management may not obtain insurance against floods, terrorism, mold-related claims, or earthquake insurance. If such an event occurs to, or causes the damage or destruction of, a property, we could suffer financial losses.

If we are found non-compliance with the Americans with Disabilities Act, we will be subject to significant liabilities.

If any of our properties are not in compliance with the Americans with Disabilities Act of 1990, as amended (the “ADA”), we may be required to pay for any required improvements. Under the ADA, public accommodations must meet certain federal requirements related to access and use by disabled persons. The ADA requirements could require significant expenditures and could result in the imposition of fines or an award of damages to private litigants. We cannot assure that ADA violations do not or will not exist at any of our properties.

We have never paid dividends on our common stock, and cannot guarantee that we will pay dividends to our stockholders in the future.

We have never paid dividends on our common stock. For the foreseeable future, we intend to retain our future earnings, if any, in order to reinvest in the development and growth of our business and, therefore, do not intend to pay dividends on our common stock. However, in the future, our board of directors may declare dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and such other factors as our board of directors deems relevant. Accordingly, investors may need to sell their shares of our common stock to realize a return on their investment, and they may not be able to sell such shares at or above the price paid for them. We cannot guarantee that we will pay dividends to our stockholders in the future.

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Requirements associated with being a reporting public company will require significant company resources and management attention.

Commencing on the effective date of the registration statement of which this prospectus is a part, and continuing for at least one year thereafter, we will be required to file certain reports with the SEC pursuant to Section 15(d) of the Exchange Act. We intend to file periodic reports to maintain current information with the SEC on Forms 10-Q, 10-K and 8-K as prescribed by the rules and regulations of the Exchange Act. We work with independent legal, accounting and financial advisors to ensure adequate disclosure and control systems to manage our growth and our obligations as a company that files reports with the SEC. These areas include corporate governance, internal control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. However, we cannot assure you that these and other measures we may take will be sufficient to allow us to satisfy our obligations as an SEC reporting company on a timely basis.

In addition, compliance with reporting and other requirements applicable to SEC reporting companies will create additional costs for us. It will require the time and attention of management and will require the hiring of additional personnel and legal, audit and other professionals. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the impact that our management’s attention to these matters will have on our business.

Our inability to effectively manage our growth could harm our business and materially and adversely affect our operating results and financial condition.

Our strategy envisions growing our business. Any growth in or expansion of our business is likely to continue to place a strain on our management and administrative resources, infrastructure and systems. As with other growing businesses, we expect that we will need to further refine and expand our business development capabilities, our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We cannot assure you that we will be able to:

● expand our business effectively or efficiently or in a timely manner;

● allocate our human resources optimally;

● meet our capital needs;

● identify and hire qualified employees or retain valued employees; or

● effectively incorporate the components of any business or product line that we may acquire in our effort to achieve growth.

Our inability or failure to manage our growth and expansion effectively could harm our business and materially and adversely affect our operating results and financial condition.

We will be required to attract and retain top quality talent to compete in the marketplace.

We believe our future growth and success will depend in part on our ability to attract and retain highly skilled managerial, sales and marketing, and finance personnel. There can be no assurance of success in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to compete in the marketplace.

We are dependent on Bryan McLaren, our Chief Executive Officer and President, and the loss of this officer could harm our business and prevent us from implementing our business plan in a timely manner.

In view of his direct relationships with industry partners that directly contribute to our business development strategy, our success depends substantially upon the continued services of Mr. McLaren. Although we intend to purchase a key person life insurance policy on our Chief Executive Officer and President, we do not currently maintain such a policy. The loss of Mr. McLaren’s services could have a material adverse effect on our business and operations.

Adam Wasserman, our Chief Financial Officer, does not dedicate 100% of his time to our business.

Adam Wasserman, our Chief Financial Officer, provides services to us under a letter agreement with CFO Oncall, Inc (“CFO Oncall”), which permits him to provide services to other companies during the term of the agreement. Mr. Wasserman is Chief Executive Officer of CFO Oncall, where he owns 80%. All compensation payable under the letter agreement is paid to CFO Oncall. CFO Oncall provides chief financial officer services to various companies. Mr. Wasserman also serves as Chief Financial Officer of Cleantech Solutions International, Inc. since December 2012, Pen Inc. since January 2015, LegecyXchange, Inc. since November 2014, and other companies from time to time. Mr. Wasserman dedicates approximately 31% of his business time to us. In addition to Mr. Wasserman’s time, CFO Oncall has full-time dedicated, professional employees that also assist Mr. Wasserman with our financial matters and communication needs. Mr. Wasserman’s other projects may detract from the time he can spend on our business.

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Risks Related to Our Common Stock and This Offering

Our common stock is quoted on the Pink Sheets, which may limit the liquidity and price of our common stock more than if our common stock were listed on the Nasdaq Stock Market or another national exchange.

Our securities are currently quoted on the Pink Sheets, an inter-dealer automated quotation system for equity securities. Quotation of our securities on the Pink Sheets may limit the liquidity and price of our securities more than if our securities were listed on the Nasdaq Stock Market or another national exchange. As a Pink Sheets company, we do not attract the extensive analyst coverage that accompanies companies listed on national securities exchanges. Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the Pink Sheets. These factors may have an adverse impact on the trading and price of our common stock.

The trading price of our common stock may decrease due to factors beyond our control.

The stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our shareholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity, or equity-related securities, in the future at a price we deem appropriate.

The market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:

● variations in our quarterly operating results,

● changes in general economic conditions and in the real estate industry,

● changes in market valuations of similar companies,

● announcements by us or our competitors of significant new contracts, acquisitions, strategic partnerships or joint ventures, or capital commitments,

● loss of a major customer, partner or joint venture participant and

● the addition or loss of key managerial and collaborative personnel.

Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

The market price for our common shares is particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your common shares at or above your purchase price, which may result in substantial losses to you.

The market for our common shares is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our common shares are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our common shares, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common shares will be at any time, including as to whether our common shares will sustain their current market prices, or as to what effect that the sale of shares or the availability of common shares for sale at any time will have on the prevailing market price.

The registration and potential sale, pursuant to this prospectus, by the selling stockholders of a significant number of shares could depress the price of our common stock.

Because there is a limited public market for our common stock, there may be significant downward pressure on our stock price caused by the sale or potential sale of a significant number of shares pursuant to this prospectus, which could allow short sellers of our stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may further depress the price of our common stock.

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If the selling stockholders sell a significant number of shares of common stock, the market price of our common stock may decline. Furthermore, the sale or potential sale of the offered shares pursuant to the prospectus and the depressive effect of such sales or potential sales could make it difficult for us to raise funds from other sources.

Our preferred stockholders together have, and will continue to have after giving effect to this offering, voting control, which will limit your ability to influence the outcome of important transactions, including a change in control.

Each of our preferred stockholders beneficially owns 1,000,000 shares of our preferred stock. Each share of preferred stock entitles the holder to 50 votes per share. In contrast, each share of our common stock, which is the stock we are offering pursuant to this prospectus, has one vote per share. Upon the completion of this offering, each of our preferred stockholders will hold approximately 43% of the voting power of our outstanding capital stock. Because of the 50-to-1 voting ratio between our preferred stock and our common stock, after the completion of this offering, our preferred stockholders together will continue to control a majority of the combined voting power of our capital stock and therefore be able to control all matters submitted to our stockholders for approval. The preferred stockholders may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

Because we are subject to additional regulatory compliance matters as a result of being a public company, which compliance includes Section 404 of the Sarbanes-Oxley Act, and our management has limited experience managing a public company, the failure to comply with these regulatory matters could harm our business.

Our management and outside professionals will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company. Bryan McLaren, our President, has little experience running a public company. For now, he will rely heavily on legal counsel and accounting professionals to help with our future SEC reporting requirements. This will likely divert needed capital resources away from the objectives of implementing our business plan. These expenses could be more costly than we are able to bear and could result in us not being able to successfully implement our business plan.

We expect rules and regulations such as the Sarbanes-Oxley Act will increase our legal and finance compliance costs and make some activities more time-consuming than in the past. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company.

As a smaller reporting company, our management will be required to provide a report on the effectiveness of our internal controls over financial reporting, but will not be required to provide an auditor’s attestation regarding such report. Section 404 compliance efforts may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification of Section 404 by the time we will be required to do so. If we fail to do so, or if in the future our management determines that our internal controls over financial reporting are not effective, we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our stock. Furthermore, whether or not we comply with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement necessary procedures or changes effectively or efficiently, it could harm our operations, financial reporting or financial results.

10

Rule 144 Related Risks

Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock for at least six months is entitled to sell his or her securities provided that: (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale, (ii) we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale and (iii) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale.

Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

● 1% of the total number of securities of the same class then outstanding; or

● the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale. Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.

In addition, as a former shell company, we are subject to additional restrictions. Historically, the SEC staff has taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, shell companies, such as Zoned Properties. Rule 144 is not available for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an exception to this prohibition, however, if the following conditions are met:

● The issuer of the securities that was formerly a shell company has ceased to be a shell company,

● The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act,

● The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than current reports on Form 8-K, and

● At least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company.

Therefore, Rule 144 will be unavailable for resales by our stockholders until at least 12 months following the time that the registration statement on Form S-1, of which this prospectus forms a part, is declared effective by the SEC.

We are registering the resale of 1,351,915 shares of common stock, which may be sold by the selling stockholders. The resale of such shares by the selling stockholders could depress the market price of our common stock.

We are registering the resale of 1,351,915 shares of common stock under the registration statement of which this prospectus forms a part. As of September 30, 2015, the shares being registered represent approximately 7.9% of our outstanding common stock. The sale of these shares into the public market by the selling stockholders could depress the market price of our common stock. As of September 30, 2015, there were 17,060,250 shares of our common stock issued and outstanding. The sale of those additional shares into the public market by the selling stockholders could further depress the market price of our common stock.

The arbitrary offering price of the shares being offered by the selling stockholders pursuant to this prospectus may result in a loss of value of shares of our common stock.

The offering price of the shares bears no relation to book value, assets, earnings or any other objective criteria of value. It has been arbitrarily determined by the selling stockholders. There can be no assurance that the shares will attain market values commensurate with the offering price.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this prospectus that are forward-looking in nature are based on the current beliefs of our management as well as assumptions made by and information currently available to management, including statements related to general trends in our operations or financial results, plans, expectations, estimates and beliefs. In addition, when used in this prospectus, the words “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “predict” and similar expressions and their variants, as they relate to us or our management, may identify forward-looking statements. These statements reflect our judgment as of the date of this prospectus with respect to future events, the outcome of which is subject to risks, which may have a significant impact on our business, operating results or financial condition. You are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. Except as required by law, we undertake no obligation to update forward-looking statements. The risks identified in the “Risk Factors” section of this prospectus, among others, may impact forward-looking statements contained in this prospectus.

You should also refer to the section of this prospectus entitled “Risk Factors” for a discussion of factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time-frame, or at all.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you.

USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock offered by the selling stockholders. See “Principal and Selling Stockholders.”

DETERMINATION OF OFFERING PRICE

The shares being offered by the selling stockholders will be sold at a fixed price of $________ per share. The offering price of the shares bears no relation to book value, assets, earnings, or any other objective criteria of value. The offering price for the shares has been arbitrarily determined by the selling stockholders.

PRINCIPAL AND SELLING STOCKHOLDERS

At September 30, 2015, we had 17,060,250 shares of our common stock issued and outstanding. We are registering for resale shares of our common stock that are issued and outstanding held by the selling stockholders identified below. We are registering the shares to permit the selling stockholders to resell the shares when and as they deem appropriate in the manner described in the “Plan of Distribution.” The following table sets forth information regarding the beneficial ownership of our common stock as of September 30, 2015, and as adjusted to reflect the sale of common stock offered by the selling stockholders in this offering, for:

● Each of our named executive officers,

● Each of our directors,

● All of our directors and executive officers as a group

● Each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock, and

● All selling stockholders.

Each share of common stock is entitled to one vote per share on each matter submitted to a vote of stockholders. Each share of our non-convertible preferred stock is entitled to 50 votes per share on each matter submitted to a vote of stockholders. Holders of preferred shares vote along with common stockholders on each matter submitted to a vote of security holders. As a result of the multiple votes accorded to holders of the preferred stock, Greg Johnston and Alex McLaren have the ability to control the outcome of all matters submitted to a vote of stockholders, including the election of directors. In addition, certain corporate action requires the affirmative vote by holders of at least 51% of the outstanding preferred stock. On those matters that require the approval of at least 51% of the preferred stock, both Mr. Johnston and Mr. McLaren must provide their approval inasmuch as each of them owns 50% of the outstanding preferred stock. A more complete description of the rights and privileges of the preferred stock is contained elsewhere in this prospectus under the caption “Description of Securities.”

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Information on beneficial ownership of securities is based upon a record list of our stockholders and we have determined beneficial ownership in accordance with the rules of the SEC. We believe, based on the information furnished to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Based on the information provided to us by or on behalf of the selling stockholders, none of the selling stockholders, and no entity listed in the footnotes to the table below, is a broker-dealer nor an affiliate of a broker-dealer. None of the selling stockholders had an agreement or understanding, directly or indirectly, to distribute any of the shares being registered at the time of purchase.

The selling stockholders may offer for sale all or part of the shares from time to time. The table below assumes that the selling stockholders will sell all of the shares offered for sale. The selling stockholders are under no obligation, however, to sell any shares pursuant to this prospectus. Unless otherwise indicated, the business address of each person listed below is c/o Zoned Properties, Inc., 14300 N. Northsight Blvd., #208, Scottsdale, AZ 85260.

The resale of 1,351,915 shares of our common stock is covered by this prospectus. The circumstances under which the selling stockholders received their shares are as follows:

● During the quarter ended March 31, 2014, we sold 48,980 shares to an aggregate of 45 investors in a private placement of common stock under Section 4(2) of the Securities Act and the rules and regulations thereunder, at a purchase price of $120.00 per share.

● In July 2014, we sold 16,637,000 shares issued to an aggregate of 52 investors in a private placement of common stock under Section 4(2) of the Securities Act and the rules and regulations thereunder, at a purchase price of $0.01 per share.

● From August 2014 to December 2014, we sold 1,850,000 shares issued to an aggregate of seven investors in a private placement of common stock under Section 4(2) of the Securities Act and the rules and regulations thereunder, at a purchase price of $1.00 per share.

● In May 2015, we sold 1,000,000 shares of common stock to accredited investors pursuant to a private placement, in a private placement of common stock under Section 4(2) of the Securities Act and the rules and regulations thereunder, at a purchase price of $1.00 per share.

● 30,000 of the shares were issued to three individuals as compensation for their services as directors.

All of the shares being offered by the selling stockholders pursuant to this prospectus were acquired in one of the above transactions.

Named Executive Officers and Directors:	Stock Beneficially Owned Prior to Offering (1)			Percent of Class Beneficially Owned Prior to Offering			Percent of Voting Power Prior to Offering (14)			Shares of Common Stock Offered under this Prospectus		Stock Beneficially Owned After Offering (1)		Percent of Class Beneficially Owned After Offering			Percent of Voting Power After Offering (14)
Bryan McLaren		-			-			-			-		-		-			-
Irvin Rosenfeld		10,000			*			*			10,000		-		-			-
Art Friedman		10,000			*			*			10,000		-		-			-
Alex McLaren		1,511,667			8.9	%		44.0	%		10,000		1,501,667		8.8	%		44.0	%
Patricia Haugland		15,000			*			*			-		15,000		-			-
Adam Wasserman(15)		-			-			-			-		-		-			-
All executive officers and directors as a group (6 persons)		1,546,667			9.1	%		44.0	%		30,000		1,516,667		8.9	%		44.0	%
Other 5% Owners:
Alan Abrams 16624 North 90th Street, Ste. 101 Scottsdale, AZ 85260		3,526,669			20.7	%		3.0	%		-		3,526,669		20.7	%		3.0	%
Greg Johnston 915 Stitch Rd. Lake Stevens, WA 98258		2,512,500			14.7	%		44.9	%		-		2,512,500		14.7	%		44.9	%
Christopher Carra 8880 E. Friess Scottsdale, AZ 85260		2,043,335			12.0	%		1.7	%		-		2,043,335		12.0	%		1.7	%
Other Selling Stockholders:
Andrew Ludwig 1508 Bay Rd. Apt. 829 North Miami Beach, FL 33139		55,418	(3)		*			*			11,084		44,334		*			*
Beth Levine c/o Caron Partners, LP 20155 NE 38th Court #1804 Aventura, FL 33180		100,834 (4)			*			*			20,167		80,667		*			*
Chuck Abate 12 Jeremy Way Old Bridge, NJ 08857		125,000			*			*			25,000		100,000		*			*

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Named Executive Officers and Directors:	Stock Beneficially Owned Prior to Offering (1)			Percent of Class Beneficially Owned Prior to Offering			Percent of Voting Power Prior to Offering (14)	Shares of Common Stock Offered under this Prospectus		Stock Beneficially Owned After Offering (1)			Percent of Class Beneficially Owned After Offering			Percent of Voting Power After Offering (14)
Clifford Berger 7 Old Round Hill Ln. Greenwich, CT 06831		201,667			1.2	%	*		40,333		161,334			*		*
Clyde S. Yamamoto 13419 65th Ave. W Edmonds, WA 98026		600,000			3.5	%	*		120,000		480,000			2.9	%	*
Daniel Hartwell 5505 N. Ocean Blvd., #201, Ocean Ridge, FL 33435		10,084			*		*		2,017		8,067			*		*
Daniel Iannettone 736 Arthur Godfrey Miami Beach, FL 33140		50,417			*		*		10,083		40,334			*		*
Raimondo Dias c/o Fusion Capital Investments Corp. 620 NW 12th Ave. Boca Raton, FL 33486		20,417	(5)		*		*		4,083		16,334			*		*
Gerard Pollino 16 Overidge Ln. Wilton, CT 06897		201,667			1.2	%	*		40,333		161,334			*		*
Guy S. Amico 3526 Palais Terrace Wellington, FL 33449		200,000			1.2	%	*		40,000		160,000			*		*
Jeffrey Williams c/o El Dorado LLC Pop Center, Edgar Rios, 19th Floor,  208 Ponce de Leon San Juan, PR 00918		100,709	(6)		*		*		20,142		80,567			*		*
Jody Kane 10 Power Horn Hill Rd. Wilton, CT 06897		50,417			*		*		10,083		40,334			*		*
Joseph Bartonek 949 Durham Rd. Edison, NJ 08817		756,250			4.4	%	*		151,250		605,000			3.5	%	*
John Andrew Hulsey c/o John Andrew Hulsey Living Trust 14629 Marshview Drive, Jacksonville, FL 32250		115,834	(7)		*		*		23,167		92,667			*		*
Jonathan Lichter 1119 Cambridge Rd. Teaneck, NJ 07666		151,251	(8)		*		*		30,250 (9)		121,001	(10)		*		*
Keith Anderson and Cathy Zeni 18324 Hampton Ct. Livonia, MI 48152		100,834			*		*		20,167		80,667			*		*

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Named Executive Officers and Directors:	Stock Beneficially Owned Prior to Offering (1)			Percent of Class Beneficially Owned Prior to Offering			Percent of Voting Power Prior to Offering (14)	Shares of Common Stock Offered under this Prospectus		Stock Beneficially Owned After Offering (1)		Percent of Class Beneficially Owned After Offering		Percent of Voting Power After Offering (14)
Laura Anthony c/o Legal & Compliance LLC 330 Clematis Street Suite 217 West Palm Beach, FL 33401		100,000			*		*		20,000		80,000		*	*
Mark Baker 320 Don Fernando Rd. Santa Fe, NM 87505		200,000			1.2	%	*		40,000		160,000		*	*
Max Nalder 113 Paradise Pt. Dr. Brandon, MS 85248		183,517			1.1	%	*		36,703		146,814		*	*
Michael Antonakos 17 S. Hampton Dr. Fairfield, NJ 07004		10,084			*		*		2,017		8,067		*	*
Michael Blume 5505 N. Ocean Blvd., Ste 107 Boynton, FL 33435		39,167			*		*		7,833		31,334		*	*
Chris Humphrey 4808 N. 24th St., #403 Phoenix, AZ 85016		5,000			*		*		1,000		4,000		*	*
Michael Iacono 11606 Orange Blossom Ln. Boca Raton, FL 33428		200,000			1.2	%	*		40,000		160,000		*	*
Milton B. Hubbard III 120 N. Hamilton Dr., Apt. 12 Beverly Hills, CA 90211		197,667			1.2	%	*		39,533		158,134		*	*
Nicholas Gregory Johnston 915 Stitch Rd. Lake Stevens, WA 98258		150,000			*		*		30,000		120,000		*	*
Peter Ferrara 1106 Don Cubero Ave. Santa Fe, NM 87505		200,000			1.2	%	*		*		40,000		160,000	*
Regina Fieramosca 15 Wescott Blvd. Staten Island, NY 10314		50,417			*		*		*		10,083		40,334	*
Richard Kepes and Judy Kepes 3665 Quail Hollow Dr. Bloomfield Hills, MI 48302		100,834			*		*		*		20,167		80,667	*
Ron Levine c/o Bellajule Partners LP 20155 NE 38th Ct. #1804 Aventura, FL 33180		50,418	(11)		*		*		*		10,084		40,334	*
Ronald Iannelli 30-75 33rd St., #B4 Astoria, NY 11102		50,417			*		*		*		10,083		40,334	*

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Named Executive Officers and Directors:	Stock Beneficially Owned Prior to Offering (1)			Percent of Class Beneficially Owned Prior to Offering			Percent of Voting Power Prior to Offering (14)	Shares of Common Stock Offered under this Prospectus	Stock Beneficially Owned After Offering (1)		Percent of Class Beneficially Owned After Offering		Percent of Voting Power After Offering (14)
Scott H. Goldstein 6799 Royal Orchid Circle Delray Beach, FL 33446		200,000			1.2	%	*	*		40,000		160,000	*
Thomas V. Sagona 30 Sagona Court Staten Island, NY 10309		252,084			1.5	%	*	*		50,417		201,667	*
Todd Ruetsch 419 Knowell Rd.  Camillus, NY 13031		100,834			*		*	*		20,167		80,667	*
Tom Fagan and Beverly Fagan 6080 Wellington Ave. Gainesville, GA 30506		200,934			1.2	%	*	*		40,167		160,667	*
William Boyce 6814 Kingsbury St. Louis, MO 63130		301,667			1.2	%	*	*		60,333		241,334	*
Guy S. Amico c/o Newbridge Financial, Inc. 3526 Palais Terrace Wellington, FL 33449		550,000	(12)		3.2	%	*	*		110,000		440,000	*
Maureen Kenny c/o Philip B. Kenny Trust 707 Glenayre Dr. Glenview, IL 60025		500,000	(13)		2.9	%	*	*		100,000		400,000	*
Karen Bovay 1532 W. Campbell Ave. Phoenix, AZ 85015		25,000			*		*	*		5,000		20,000	*
Jennifer Kridos 8880 E. Friess Dr. Scottsdale, AZ 85260		50,417			*		*	*		10,083		40,334	*
Valera Knight 7718 E. Chaparral Rd. Scottsdale, AZ 85250		50,417			*		*	*		10,083		40,334	*

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*	Less than 1%.
(1)	Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, securities that are currently convertible or exercisable into shares of our common stock, or convertible or exercisable into shares of our common stock within 60 days of the date hereof are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name.
(2)	Of these shares, 1,501,667 shares are held by McLaren Family LLLP. Alex McLaren is the general partner of McLaren Family LLLP and has voting and dispositive power over such shares.
(3)	Of these shares, 40,334 are held by NuView IRA FBO Andrew Ludwig. Mr. Ludwig has voting and dispositive power over such shares.
(4)	Shares are held by Caron Partners, LP. Beth Levine has voting and dispositive power over these shares.
(5)	Shares are held by Fusion Capital Investments Corp. Mr. Dias has voting and dispositive power over such shares.
(6)	Shares are held by El Dorado LLC. Mr. Williams has voting and dispositive power over such shares.
(7)	Shares are held by John Andrew Hulsey Living Trust, of which Mr. Hulsey is the trustee. Mr. Hulsey has voting and dispositive power over such shares.
(8)	Of these shares, 100,834 are held by Diamond Bridge Capital LLC. Mr. Lichter has voting and dispositive power over such shares.
(9)	Of these shares, 20,167 are being offered by Diamond Bridge Capital LLC. Mr. Lichter has voting and dispositive power over such shares.
(10)	Of these shares, 80,667 will be held by Diamond Bridge Capital LLC. Mr. Lichter has voting and dispositive power over such shares.
(11)	Shares are held by Bellajule Partners, LP. Mr. Levine has voting and dispositive power over such shares.
(12)	Shares are held by Newbridge Financial, Inc. Mr. Amico has voting and dispositive power over such shares.
(13)	Shares are held by Philip B. Kenny Trust, of which Ms. Kenny is the trustee. Ms. Kenny has voting and dispositive power over such shares.
(14)	Gives effect to ownership of preferred stock (see table below), the holders of which are entitled to 50 votes per share.
(15)	Does not include 19,600 shares of common stock issued pursuant to the October 1, 2015 agreement with CFO OnCall that is described elsewhere in this prospectus under the caption “Certain Relationships and Related Transactions.”

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Preferred Stock

Name and Address of Beneficial Owner	Shares of Preferred Stock Beneficially Owned		Percent of Class Beneficially Owned			Percent of Voting Power (2)
Greg Johnston 915 Stitch Rd. Lake Stevens, WA 98258		1,000,000		50	%		44.9	%
Alex McLaren (1) c/o Zoned Properties, Inc. 14300 N. Northsight Blvd., #208 Scottsdale, AZ 85260		1,000,000		50	%		44.0	%

(1)	Shares are held by McLaren Family LLLP. Alex McLaren is the general partner of McLaren Family LLLP and has voting and dispositive power over such shares.
(2)	As a result of the multiple votes accorded to holders of the preferred stock (50 votes per share), Greg Johnston and Alex McLaren have the ability to control the outcome of all matters submitted to a vote of stockholders, including the election of directors. The percent of voting power in the table gives effect to the holder’s beneficial ownership of common stock and preferred stock.

PLAN OF DISTRIBUTION

This prospectus relates to the resale of 1,351,915 shares of common stock offered by the selling stockholders. The selling stockholders and any of their respective pledges, donees, assignees and other successors-in-interest may, from time to time, sell any or all of its shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These shares shall be sold at a fixed price of $______ per share. The offering price of the shares bears no relation to book value, assets, earnings, or any other objective criteria of value. It has been arbitrarily determined by the selling stockholders.

The selling stockholders may use any one or more of the following methods when selling shares:

● ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

● block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

● purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

● an exchange distribution in accordance with the rules of the applicable exchange;

● privately negotiated transactions;

● short sales after this registration statement becomes effective;

● broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

● through the writing of options on the shares;

● a combination of any such methods of sale; and

● any other method permitted pursuant to applicable law.

The selling stockholders or any of their respective pledgees, donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Before any such agent, or broker-dealer sells any of the shares registered here, a post-effective amendment will be filed to name anyone receiving compensation for selling the shares before any sales take place. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at the fixed price of $_______ per share, which may be below the then market price. The selling stockholders cannot assure that all or any of the shares offered in this prospectus will be sold by the selling stockholders. The selling stockholders and any brokers, dealers or agents, upon effecting the sale of any of the shares offered in this prospectus, are “underwriters” as that term is defined under the Securities Act or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

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A selling stockholder may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by it and, if it defaults in the performance of its secured obligations, the pledgee or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or any other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

A selling stockholder also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors-in-interest as selling stockholders under this prospectus.

We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

The selling stockholders acquired the securities offered hereby in the ordinary course of business and have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus.

If the selling stockholders use this prospectus for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of our common stock and activities of the selling stockholders.

DIVIDEND POLICY

Historically, we have not paid any cash dividends on our common stock. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. However, in the future, our board of directors may declare dividends on our common stock. Payment of future dividends on our common stock, if any, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. In addition, the agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. We cannot guarantee that we will pay dividends to our stockholders in the future. Holders of preferred shares are entitled to dividends equal to common share dividends.

DESCRIPTION OF SECURITIES

The following discussion summarizes the material terms of our common stock and preferred stock. This discussion does not purport to be complete and is qualified in its entirety by reference to our articles of incorporation, as amended, and our bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus forms a part.

General

As of the date of this prospectus, our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share, 17,060,250  of which were issued and outstanding, and 5,000,000 shares of preferred stock, $0.001 par value per share, 2,000,000 of which were issued and outstanding.

Common Stock

Holders of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Holders of the Company’s common stock are entitled to share in all dividends that our board of directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. The Company’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s common stock.

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Cash Dividends

Historically, we have not paid any cash dividends on our common stock. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. However, in the future, our board of directors may declare dividends on our common stock. Payment of future dividends on our common stock, if any, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. In addition, the agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. We cannot guarantee that we will pay dividends to our stockholders in the future. Holders of preferred shares are entitled to dividends equal to common share dividends.

Preferred Stock

Our articles of incorporation, as amended, authorizes our board of directors, subject to any limitations prescribed by law, without further stockholder approval, to establish and to issue from time to time one or more classes or series of preferred stock. Each class or series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions determined by the board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion rights, preemptive rights and redemption rights. Except as provided by law or in a preferred stock designation, the holders of preferred stock will not be entitled to vote at or receive notice of any meeting of stockholders.

The certificate of designation for the preferred stock provides that the shares are not convertible into any other class or series of stock. Holders of preferred shares are entitled to 50 votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding. Upon liquidation, holders of preferred stock will be entitled to receive $1.00 per share plus redemption provision before assets are distributed to other stockholders. Holders of preferred shares are entitled to dividends equal to common share dividends. Once any shares of preferred stock are outstanding, at least 51% of the total number of shares of preferred stock outstanding must approve the following transactions:

● alteration of the rights, preferences of privileges of the preferred stock,

● creation of any new class of stock having preferences over the preferred stock,

● repurchase of any of our common stock,

● merger of consolidation with any other company, other than one of our wholly-owned subsidiaries,

● sale, conveyance or other disposal of, or creation or incurrence of any mortgage, lien, or charge or encumbrance or security interest in or pledge of, or sale and leaseback of, all or substantially all of our property or business, or

● incurrence, assumption or guarantee of any indebtedness maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by us, except for operating leases and obligations assumed as part of the purchase price of property.

Holders of a majority of the voting power of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of our outstanding voting shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation.

Holders of preferred shares vote along with common stockholders on each matter submitted to a vote of security holders. As a result of the multiple votes accorded to holders of the preferred stock, Greg Johnston and Alex McLaren have the ability to control the outcome of all matters submitted to a vote of stockholders, including the election of directors. On those matters that require the approval of at least 51% of the preferred stock, both Mr. Johnston and Mr. McLaren must provide their approval inasmuch as each of them owns 50% of the outstanding preferred stock.

Anti-Takeover Effects of Certain Provisions of Our Articles of Incorporation, as Amended, and Our Bylaws

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

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Preferred Stock. Our articles of incorporation, as amended, authorize our board of directors to issue from time to time any series of preferred stock and fix the voting powers, designation, powers, preferences and rights of the shares of such series of preferred stock.

Calling of Special Meetings of Stockholders. Our bylaws provide that special meetings of the stockholders may be called only by the chairman of the board or the chief executive officer, and shall be called by the chairman of the board or the secretary (i) when so directed by the board, or (ii) at the written request of stockholders owning shares representing at least 25% of voting power in the election of directors.

Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our bylaws establish an advance notice procedure for stockholder proposals to be brought before a meeting of our stockholders, including proposed nominations of persons for election to the board of directors.

Removal of Directors; Vacancies. Our bylaws provide that a director may be removed from office by stockholders for cause, or without cause by a majority vote of the stockholders. A vacancy on the board of directors may be filled only by a majority of the directors then in office.

DESCRIPTION OF THE BUSINESS

Overview

Zoned Properties, Inc., incorporated in Nevada on August 25, 2003, believes that the traditional commercial real estate industry is being disrupted by many factors that can be characterized as “mega trends.” These trends include technological changes, shifting demographics resulting in a greater influence of millennials and social changes. The utilization of commercial property for retail, business and education is being affected by digital means as opposed to physical means. As a commercial property, project development and management services company, our mission is to identify, develop, and manage properties, initially for the medical marijuana industry and, as our operations develop, for other emerging industries. Our strategy, which is aligned with these shifting trends, positions us well to create property value and enhanced cash flow from rents leveraging our expertise in zoning, permitting, security, energy efficiency, waste and water remediation and sustainable design.

In order to drive value creation, one of trends we have focused on with respect to commercial properties has been the emergence on a state-by-state basis of licensed medical marijuana dispensaries and cultivation facilities. We have established a focus on commercial real estate development in this space to derive value from the new and emerging medical marijuana industry without directly participating in the cultivation, distribution, or sale of medical marijuana products. While we intend to expand into a variety of emerging industries, our current focus is on developing projects within the emerging medical marijuana industry.

The core of our business involves identifying and developing properties that exist within highly regulated zoning regions and may be candidates for re-zoning. For the licensed medical marijuana industry, local jurisdictions typically develop strict zoning regulations that dictate the specific region within which a licensed cultivation or retail property can operate. These regulations often include setbacks for example restricting the licensed facility from being within a mile of any parks, schools, churches, or residential districts. In some jurisdictions, local representatives will simply adopt the rules and regulations established by the state legislation. It is at that point that the local representatives welcome participation from the community and developers such as our company to establish more customized regulations for zoning that meet the local community’s needs.

We have been closely involved with local representatives in each of the developed properties currently held in our portfolio. For example, we have worked directly with local representatives in Tempe, Arizona over the past year to continue to define and develop local code that regulates the development of licensed medical marijuana facilities. The code amendments directly impact the continued development of our licensed medical marijuana cultivation facility that operates within city limits.

The process of establishing zoning and permitting will directly impact our ability to place a licensed operator in a long-term lease agreement. In a scenario where the zoning and permitting process has not been completed, such as is the case for our property in Gilbert, Arizona, we continue to work with local representatives to explore development possibilities as the industry evolves. We approach these situations on a case-by-case basis. In locations where we conclude that the zoning and permitting may not be feasible at this time but have a possibility to be successful in the future, we will likely hold the undeveloped property or lease the property out in the interim.

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The successful development of zoning, permitting, construction and placement of long-term tenants creates an increased value for the property. Our property in Kingman, Arizona was successfully developed in this manner. The long-term lease agreement with a licensed operator has led to a leased-fee appraisal valued above five times the initial acquisition cost. We charge over thirty-five dollars per square foot in rent, a significant premium compared to standard market rates in that region.

This is an essential aspect of our overall growth strategy and value creation because we target specifically zoned properties that can be developed as candidates for specific industry operators. Once the properties have been acquired, adequately zoned and permitted, the opportunity to increase their value becomes substantially greater as a result of above market rents, as the demand for these properties within the specific zoning region increases.

We focus on acquiring properties that have the potential to increase significantly in value and use development strategies to build long-term growth. We have established a network of experts in the fields of real estate, design, construction, operations, and management in order to provide clients and prospective tenants with complete solutions to best meet their needs. We require all of our clients and prospective tenants to go through extensive due diligence in order to be what we consider to be highly sophisticated, credit worthy and experienced operators in their industries.

We currently maintain a portfolio of properties that we own, lease, and manage. In addition, we provide direct consultation and support for the development of each property. Development can range from complete architectural design and subsequent build-out, utility installation, property management, facilities management, and state of the art security systems. There are significant challenges that exist when zoning, permitting, and constructing facilities associated with the medical marijuana market. Each state and jurisdiction adopts specific zoning and permitting regulations. We have gained valuable knowledge and experience in this area by successfully completing four major projects in the state of Arizona, a highly regulated market. We believe we can replicate this business model in other states as markets mature and tighter regulations are established.

Our vision is to be recognized for creating the standard in property development for emerging industries, while increasing community prosperity and shareholder value. We believe that a strong focus on the development of real estate properties will bring value to the local communities and all of our stakeholders. We have initially established a focus on properties within the medical marijuana industry because we believe there will be increasing demand in this industry, as the national industry continues to evolve.

Our strategy is to rent buildings that we purchase and to earn rental income. Property acquisitions in 2014 are an indication of the commencement of principal operations. These properties represent assets that have already been identified and zoned for licensed medical marijuana operations.

We are the sole member of eight limited liability companies: Tempe Industrial Properties LLC, Gilbert Property Management LLC, Green Valley Group LLC, Kingman Property Group LLC, Chino Valley Properties LLC, Zoned Colorado Properties LLC, Zoned Illinois Properties LLC, and Zoned Oregon Properties LLC.

Four of the entities have completed acquisitions of property as agents of Zoned Properties. Gilbert Property Management LLC, Green Valley Group LLC, Kingman Property Group LLC, and Chino Valley Properties LLC have all acquired land and real property.

Green Valley Group LLC, Kingman Property Group LLC, and Chino Valley Properties LLC have executed lease agreements at the properties within their respective regions and have begun generating rental revenue. Zoned Properties has executed multiple lease agreements at its Tempe, Arizona property and has been generating rental revenue.

We currently own a portfolio of five properties located in the state of Arizona, covering an aggregate of approximately 39.1 acres and having an approximate aggregate market value as of September 30, 2015 of approximately $13 million based on most recent appraisals. We are also under contract to acquire an additional two properties consisting of approximately 44 acres located in the state of Colorado.

Multiple state-licensed operators have approached Zoned Properties from Oregon, Washington, Colorado, New Mexico, and Illinois for consultation and to partner on development and prospective sale-lease back arrangements. We are currently evaluating these opportunities and exploring financing terms with funding partners.

We believe that we are well positioned to benefit from the development opportunities that the medical marijuana industry presents without having to deal with the risk of directly cultivating, distributing, or dispensing the product, which is still illegal under federal law.

Our initial holdings and acquisition targets have been in the state of Arizona. Unlike many other states that have legalized medical marijuana, Arizona’s program has some of the strictest regulations in the country and limits the number of dispensaries that will be allowed to be open and operate within the state. While there are hundreds of marijuana dispensaries in Denver, Colorado, the entire state of Arizona can have a maximum of 126 operating dispensaries under current legislation. The strict regulations in the Arizona market provide an opportunity for investors familiar with zoning laws to have them zoned and permitted in order to establish an increase in operational value from rental revenues.

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The Opportunity in Arizona

We are implementing a property acquisition strategy in the State of Arizona that includes placing a variety of operating tenants into long-term lease agreements within the medical marijuana industry. Arizona’s medical marijuana program is still in its infancy stage. There are ample property management and build-out opportunities for medical marijuana cultivation facilities and dispensaries. We are already working with multiple groups in Arizona that are in need of quality resources or experience to get these facilities operational to serve the growing marketplace. The need for expertise regarding zoned properties was one of the main catalysts in forming our company. While there are many opportunities in Arizona, most investor groups lack the resources, knowledge, and expertise to see these projects through from start to finish, and complete the necessary due diligence required to ensure a sophisticated tenant operator.

The Opportunity in Additional States

We have created a business development plan that will allow for expansion into additional states when appropriate. Each state adopts specific and constantly evolving regulations associated with zoning, permitting, and licensing for medical marijuana operators. In October 2015 we entered into a land sale agreement to acquire a 44-acre parcel of property in Carbondale, CO, that we expect to lease to a marijuana cultivator. Zoned Properties will be introducing plans for expansion into additional states over the coming months as further regulations become established. In the first quarter of 2016, we expect to work on a development project with licensed tenant operators in Colorado and will continue to complete due diligence throughout 2016 on prospective projects in Arizona, Oregon, Washington, and Illinois.

Corporate History and Transactions

The Company was originally incorporated in Nevada on August 25, 2003 under the name, Mongolian Explorations Ltd.

In September 2013, Marc Brannigan acquired 125,000 shares of our common stock, which represented approximately 91.54% of the then issued and outstanding voting power of the Company. The transaction resulted in a change in control of the Company.

In December 2013, we entered into a Note Purchase and Loan Participation Assignment Agreement with two related parties and five individual investors, pursuant to which we issued 8,333 shares of common stock and two convertible promissory notes aggregating $170,000 to purchase a promissory note dated February 19, 2013. The promissory note in the principal amount of $209,400, has a maturity date of February 1, 2018 and is secured by a Mortgage/Deed of Trust on Real Property. There was no gain or loss recognized in this transaction. The transaction closed on January 8, 2014. On March 12, 2014, we sold the note for a cash payment of $210,500. The Company reported a realized gain of $41,019.

In December 2013, the board of directors approved the issuance of 700,000 shares of preferred stock to a related party partially owned by our former President for professional services in connection with setting up the commercial property acquisition business, management of the business and running the daily operations of the Company. On July 22, 2014, these 700,000 shares were redeemed by us for a cost of $700.

On January 22, 2014, we entered into a real estate purchase agreement pursuant to which we acquired certain land located in Gilbert, Arizona for a total payment of $266,667, of which $250,000 was paid in cash, and $16,667 was paid by issuing 139 shares of the common stock of the Company at a price of $120 per share. Simultaneously, we issued 833 shares of common stock of the Company to Cumbre Investment LLC, a related party of the Company, to acquire its right of first refusal on the land. The transaction closed on January 22, 2014.

On January 29, 2014, we entered into a purchase and consulting agreement with Ultra Health, LLC,, a related party due to common ownership and investments made by a beneficial stockholder of the Company (“Ultra Health”), pursuant to which we acquired a permanent modular building located in Gilbert, Arizona for total payments of $675,000. Simultaneously, we issued 1,166 shares of common stock of the Company at a price of $120 per share to the seller of the building to acquire a conditional use permit for the building. The transaction closed on January 29, 2014. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, we became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona discussed elsewhere in this prospectus. We review our rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, we determined that the Gilbert building carrying value of $675,000 was not recoverable and we recorded an impairment loss of $675,000

On March 7, 2014, we entered into a real estate purchase agreement with Maryland LLC, pursuant to which we acquired certain property located in Tempe., Arizona for total payments of $4,600,000, of which $2,500,000 was paid in cash and a $2,100,000 mortgage note from Maryland LLC. The transaction closed on March 7, 2014. The mortgage terms do not allow participations by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project.

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During the first quarter of 2014, we issued 48,933 shares of restricted common stock at a price of $120.00 per share to approximately 28 accredited investors pursuant to a private placement, exempt from registration under the Securities Act. The total proceeds the Company received from this private placement were approximately $5,872,000, less the $10,000 recorded as a subscription receivable.

On April 4, 2014, we entered into a purchase agreement with Ultra Health pursuant to which we acquired a modular building in Green Valley, Arizona for total payment of $87,073. On October 22, 2014, Green Valley entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez who became a beneficial stockholder of the Company in July 2014 (“Duke Rodriguez”), pursuant to which we acquired the property located in Green Valley, AZ for a purchase price of $400,000.

During the first quarter of 2014, we issued a total of 24,382 shares of common stock of the Company to settle the principal obligations of certain convertible notes payable – related parties in the amount of $330,440.

On April 14, 2014, our board of directors and its representative shareholders elected to retire 38,135 shares of common stock back into the company treasury.

Effective May 13, 2014, the Company completed a 1:120 reverse split of its common stock.  As permitted by Nevada law, the reverse split was completed with the approval of the board of directors without the requirement for shareholder consent.

On July 22, 2014, the Board of Directors accepted a subscription agreement from the McLaren Family LLLP, whose general partner is Alex C. McLaren, a Director and the father of the Company’s current President and CEO Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. We simultaneously accepted a subscription agreement from a beneficial common stockholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock for cash of $1,000. Additionally, on July 22, 2014, we accepted a subscription agreement from Gregory Johnston, a beneficial shareholder, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. In addition to a beneficial ownership of common stock, Mr. Johnston holds 50% of the current Preferred Stock that controls the Company.

On August 12, 2014, we entered into a real estate purchase agreement with Stormwind Group, LLC, a company owned by Duke Rodriguez, pursuant to which we acquired 11.3 acres in Bernalillo County, New Mexico for total payment of $2,750,000. As discussed elsewhere in this prospectus, on July 9, 2015 and amended and made effective on August 1, 2015 (the “Settlement Date”), we entered into a settlement agreement with Duke Rodriguez, Ultra Health, LLC, and Cumbre Investment, LLC (the “ Defendants”), that, among other things, settles all claims and grants mutual general releases. Under the terms of the settlement, we transferred title to the Bernalillo, New Mexico property to the Defendants.

On September 22, 2014, the Company purchased two vehicles from Arizona RV Supercenter for the aggregate purchase price of $38,855. We intend to use the vehicles on site for property and facilities management.

On October 22, 2014, Green Valley Group, LLC, our wholly owned subsidiary, entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez, pursuant to which we acquired the property located in Green Valley, AZ for a purchase price of $400,000.

From August 2014 to December 2014, we issued 1,850,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended at a price of $1.00 per share for proceeds of $1,850,000.

On April 10, 2015, we became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“Cumbre” and collectively, the “Defendants”), Case No. CV-2015-004225, wherein we alleged, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and had made material misrepresentations or had negligently misrepresented certain material elements upon which we relied in purchasing the land upon which that building was to be constructed, which the Defendants failed to deliver. On June 8, 2015, we filed a motion to dismiss the counterclaim. On July 9, 2015 and amended and made effective on August 1, 2015, we entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases.

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Under the terms of the settlement:

1.	On August 1, 2015, we transferred title to its Bernalillo, New Mexico property to Defendants. At June 30, 2015 and December 31, 2014, the carrying value of this property was $2,719,658 and $2,737,863, respectively. In connection with such property, we forfeited quarterly straight-lined rental revenue of approximately of $287,000 through September 2024. For the nine months ended September 30, 2015, rental revenues from this property amounted to $150,000. We did not have rental revenue from this property in the comparable 2014 periods.
2.	The Defendants returned 2,496,054 shares of common stock to the Company and we cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired;
3.	The Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 Acres of land and we acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000.
4.	We shall obtain water rights associated with property in Chino Valley, Arizona.

In connection with the settlement agreement, we did not record any settlement gain or loss.

All of the settlement terms were settled as of August 1, 2015 except for us obtaining the water rights associated with property in Chino Valley, Arizona. The parties continue to work towards addressing this outstanding item. It is anticipated that the Company will complete the transfer of such water rights prior to December 31, 2015. In light of the progress made in resolving the post-conditions, on October 26, 2015, the parties filed a stipulation to dismiss this lawsuit with prejudice, each party to bear its own attorneys’ fees and costs. The court issued an order, filed on October 28, 2015, dismissing the case and retaining jurisdiction to enforce the settlement.

On October 27, 2015, we entered into a letter of intent with X Bar Ranch LLC to acquire a 44-acre parcel of real property located at 421 Upper Cattle Creek Rd., Carbondale, CO for a purchase price of $1,000,000. We deposited $42,500 in earnest money with an escrow agent and the $957,500 balance is payable in cash at closing. We have the right to terminate the agreement on or prior to December 11, 2015 in the event we are unable to negotiate a satisfactory lease covering the property with HQ Organics LLC. Our obligation to close is also dependent upon HQ Organics securing a Marijuana Cultivation License covering the property. The seller may terminate the agreement in the event it cannot negotiate a nominal lease with HQ Organics so as to meet the technical requirements associated with transfer of a Marijuana Cultivation License to HQ Organics. Either party may terminate the agreement in the event the Colorado Marijuana Enforcement Division denies HQ Organics’ license or does not act on the application prior to March 25, 2016.

On October 2, 2015, we entered into a letter of intent with HQ Holdings LLC, to acquire a 2,497 square foot parcel of real property located at 730 Main Street, Silt, CO for a purchase price of $430,000, of which $4,000 has been deposited into an earnest money escrow and the $426,000 balance is due in cash at closing. The obligations of the parties to complete the sale and purchase are conditioned upon consummation of the transactions contained in the letter of intent with X Bar Ranch LLC described in the preceding paragraph. In the event such conditions are not satisfied or waived prior to June 15, 2016, either party may terminate the agreement. We intend to develop this property as a cultivation facility for lease in the event we acquire this parcel of real property.

We are the sole member of eight limited liability companies: Tempe Industrial Properties LLC, Gilbert Property Management LLC, Green Valley Group LLC, Kingman Property Group LLC, Chino Valley Properties LLC, Zoned Colorado Properties LLC, Zoned Illinois Properties LLC, and Zoned Oregon Properties LLC. Four of the entities have completed acquisitions of property as agents of Zoned Properties. Gilbert Property Management LLC, Green Valley Group LLC, Kingman Property Group LLC, and Chino Valley Properties LLC have all acquired land and real property. Green Valley Group LLC, Kingman Property Group LLC, and Chino Valley Properties LLC have executed lease agreements and have begun generating rental revenue. Zoned Properties has executed multiple lease agreements at its Tempe, Arizona property and has been generating rental revenue. Pursuant to the Settlement Agreement referenced above, the Bernalillo property was transferred to the Defendants and thereafter no longer an asset of the Company.

Customers

We target customers who require assistance with identification, development, and management of sophisticated, safe, and sustainable properties in a variety of emerging industries including the emerging medical marijuana industry. The most significant barrier to success for many industry operators includes distractions from primary business operations. These distractions often include services related to the identification of properties, zoning, permitting, designing, and constructing turn-key facilities.

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We complete significant due diligence on any prospective customer as a prospective tenant operator regardless of industry focus. Credit-worthiness, character, and cash flows are all important traits that contribute to a sophisticated customer for the Company.

Marketing

We do not actively market our services using any direct marketing campaigns. Industry reputation, word-of-mouth, and networking are the primary tools used by us to complete the marketing of our services. We maintain an updated website, shareholder presentation, and profile outlining its services. These tools are created for transparency of operations and activities. Our executive management believes the reputation of having integrity is an essential tool for marketing and business development.

Competition

The commercial real estate market is highly competitive. We believe finding properties that are zoned for the specific use of allowing cannabis growers may be limited as more competitors enter the market. Several competitors have recently entered the marketplace, including Cannabis-RX, Inc., The Cannabis Business Group, Inc., MJ Holdings, Inc., Home Treasure Finders, Inc., Advanced Cannabis Solutions, Inc. and Grow Condos, Inc. We face significant competition from a diverse mix of market participants, including but not limited to, other public companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders, as well as would be clients, marijuana operators themselves, all of whom, who may compete against us in our efforts to acquire real estate zoned for marijuana grow and retail operations. In some instances, we will be competing to acquire real estate with persons who have no interest in the marijuana business, but have identified value in a piece of real estate that we may be interested in acquiring.

Government Regulation

We are subject to applicable provisions of federal and state securities laws and to regulations specifically governing the real estate industry, including those governing fair housing and federally backed mortgage programs. Our operations will also be subject to regulations normally incident to business operations, such as occupational safety and health acts, workmen’s compensation statutes, unemployment insurance legislation and income tax and social security related regulations. Although we will use our best efforts to comply with applicable regulations, we can provide no assurance of our ability to do so, nor can we fully predict the effect of these regulations on our proposed activities.

In addition, zoning commercial properties for specific purposes, such as medical marijuana dispensaries or cultivation facilities, is subject to specific regulations to the zoning requirements for the city, county and state related to any medical marijuana facility. We expect regulations to get tighter as time goes on.

In November 2010, Arizona voters passed the Arizona Medical Marijuana Act (“AMMA”). The AMMA designates the Arizona Department of Health Services (“ADHS”) as the licensing authority for the program. ADHS is tasked with issuing Registry Identification Cards (“RIC”) to qualifying patients, designated caregivers, and dispensary agents, as well as selecting, registering, and providing oversight for nonprofit medical marijuana dispensaries. With permission from ADHS, qualifying patients or their caregivers may cultivate marijuana if the patient lives more than 25 miles from a dispensary. Currently over 95% of the state is covered within the 25-mile rule, which will eliminate the caregiver model that has been able to survive since the program’s inception in 2010.

Qualifying patients can legally possess and purchase medical marijuana under Arizona law as long as they hold a RIC. They acquire their medicine from non-profit medical marijuana dispensaries. These dispensaries acquire, possess, cultivate, manufacture, deliver, transfer, transport, supply, sell, and dispense medical marijuana. Arizona is divided into 126 Community Health Assessment Areas (each, a “CHAA”) and each CHAA may only have one dispensary located within it. Dispensaries are the only place patients are legally allowed to purchase medical marijuana in Arizona. Arizona law permits the number of CHAAs to change based on the number of registered pharmacies in Arizona. In order to operate, a dispensary must have a Dispensary Registration Certificate and Approval to Operate Certificate from ADHS. The first dispensaries began operation in 2012, and it is anticipated that at maturity, there will be about 112 dispensaries statewide – one in each CHAA not part of one of Arizona’s Native American Indian Reservations.

The U.S. Government classifies marijuana as a schedule-I controlled substance. The federal Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. The Company maintains its operations so as to remain in compliance with the CSA. Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law. The U.S. Supreme Court has ruled in United States v. Oakland Cannabis Buyers' Coop. and Gonzales v. Raich that the federal government has the right to regulate and criminalize cannabis, even for medical purposes. Therefore, federal law criminalizing the use of marijuana pre-empts state laws that legalize its use for medicinal purposes. Federal prosecutions of marijuana crimes, where the operators are acting in accordance with state law are rare, however. This is the result of U.S. Justice Department policies under the current presidential administration that allow states to implement these laws and favor not prosecuting individuals operating in accordance with applicable state law. It is possible, however, that future presidential administrations could reverse the current position regarding enforcement of federal marijuana laws, thereby effectively eliminating the legal marijuana industry.

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Employees

As of September 30, 2015, we had three full-time employees. We have established an extensive network of external partners, contractors, and consultants to outsource to in an effort to minimize administrative overhead and maximize efficiency.

Description of Property

Our principal executive offices are currently located at 14300 N. Northsight Blvd., #208, Scottsdale, AZ 85260.

On February 1, 2014, we executed a 39-month operating lease for our old office space. The annual rent during year one is $31,302, year two is $32,241 and year three $33,215. We also paid a security deposit of $3,267. We have since vacated this office location and have subleased the premises.

On January 27, 2015, we executed a 24-month operating lease for our current office space. We were able to negotiate a lower rental payment by pre-paying the entire sum of the 24-months of rental payments under the lease agreement in the amount of $57,358.25. We also paid a security deposit of $2,600.

We are in the business of property acquisition, development, and commercial leasing and intend to primarily structure lease agreements with prospective tenants using a triple-net lease model. The property portfolio currently includes (i) land and real property constructed in Green Valley, Arizona, (ii) land and real property in Kingman, Arizona, (iii) vacant land in Gilbert, Arizona, (iv) a multi-tenant industrial park in Tempe Arizona, which includes debt in the form of a $2,100,000 carry-back note held by the seller, (v) land and real property of approximately 50 acres in Chino Valley, Arizona. The properties in Tempe, Green Valley, Kingman, and Chino Valley, Arizona are currently leasing space to multiple tenants and are managed by our Real Estate Services division. Each of these leased properties is generating revenue to date.

LEGAL PROCEEDINGS

Holistic Patient Wellness Group, LLC (“HPWG”) leased from us commercial space in Tempe, Arizona to operate a medical marijuana cultivation. HPWG claims that we violated the terms of the lease for various reasons and filed suit on March 14, 2014 in the Maricopa County Superior Court, Arizona (Holistic Patient Wellness Group, LLC v. Zoned Properties, Inc., Case Number CV2014- 003047, which has been consolidated with CV2014- 005642). On May 23, 2014, we concluded that HPWG had breached the lease, and terminated the lease and retook possession of the property. On May 27, 2014, HPWG filed a petition for an order to show cause, seeking an expedited ruling on its claim that we violated the terms of the stipulated preliminary injunction. The court re-set the hearing multiple times, ultimately continuing it until March 17, 2015. In the interim, and in part to mitigate its own damages, the Company leased the property to a new tenant. At the hearing, HPWG sought sanctions in the amount of $1,000 per day for the more than 300 days it had been “locked out” of the premises (reduced from its initial demand of $10,000 per day) and an order allowing them back into the property. After conducting the hearing, the court found that we did not violate the terms of the stipulated injunction and denied HPWG’s petition. The parties participated in a settlement conference on July 22, 2015, but did not settle the case. The court ordered that Scan 4 Health and Healing Healthcare 3 could file a motion for leave to file an amended answer and counterclaim on or before November 30, 2015. To date, no such motion has been filed. On October 20, 2015, HPWG filed a motion to enforce a purported settlement Agreement with the Company and to dismiss its claims against us. We responded in opposition to the motion, because (i) the mutual release in the purported settlement agreement was too broad in its scope, and (ii) we want to preserve our right to seek an award of attorney’s fees and costs against HPWG. HPWG’s reply in support of its motion is due December 7, 2015. We anticipate that the court will rule on the motion soon thereafter.

On April 27, 2015, two entities purportedly related to HPWG moved for leave to amend their answer and counterclaim to assert several new claims against new parties, including us. On June 2, 2015, the court sua sponte denied the motion. On June 22, 2015, the parties participated in a settlement conference. We believe that any settlement damages with HPWG would be nominal.

On August 17, 2015, the court granted a renewed request made by the two entities related to HPWG to move for leave to amend their answer and counterclaim, but expressly afforded us an opportunity to respond in opposition to such a motion. On October 20, 2015, HPWG filed a motion to enforce a purported settlement agreement with us and to dismiss its claims against us. We responded in opposition to the motion, because (i) the mutual release in the purported settlement agreement was too broad in its scope, and (ii) we want to preserve our right to seek an award of attorney’s fees and costs against HPWG. HPWG’s reply in support of its motion is due December 7, 2015. We anticipate that the court will rule on the motion soon thereafter.

Except as set forth above, there are no pending or threatened legal or administrative actions pending or threatened against us that we believe would have a material effect on our business.

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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is quoted on the Pink Sheets under the symbol “ZDPY.” In the near future, we intend to apply to have our common stock quoted on the OTCQB® marketplace. If we apply to have our common stock quoted on the OTCQB®, there is no assurance that the application will be approved. There have been minimal recent public quotations of our common stock on the Pink Sheets. There has never been an active public market for our common stock, and the shares are being offered in anticipation of the development of a secondary trading market. On October 27, 2015, the closing bid price of our common stock on the Pink Sheets was $15.50 on insignificant trading.

The following table reflect the high and low bid information for our common stock for the period indicated. The bid information was obtained from the OTC Markets Group, Inc. and reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions. As of May 12, 2014, we effected a 1-for-120 reverse stock split. All prices in the following table give effect to the reverse split.

Quarter Ended	High			Low
December 31, 2014	$	30.00		$	8.50
September 30, 2014	$	30.00		$	15.00
June 30, 2014	$	1,499.40		$	30.00
March 31, 2014	$	3,372.15		$	40.82
December 31, 2013	$	66.03		$	9.05
September 30, 2013		-	(1)		-	(1)
June 30, 2013		-	(1)		-	(1)
March 31, 2013		-	(1)		-	(1)

(1) We have been unable to obtain this information despite reasonable effort and investigation.

Outstanding Shares and Holders

As of September 30, 2015, there were 17,060,250 shares of common stock issued and outstanding and there were 155 holders of record of our common stock.

Dividends

Historically, we have not paid any cash dividends on our common stock. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. However, in the future, our board of directors may declare dividends on our common stock. Payment of future dividends on our common stock, if any, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. In addition, the agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. We cannot guarantee that we will pay dividends to our stockholders in the future. Holders of preferred shares are entitled to dividends equal to common share dividends.

Reports

Upon the effectiveness of the registration statement of which this prospectus is a part, we will be subject to certain reporting requirements and will file with the SEC annual reports including annual financial statements, certified by our independent accountants, and unaudited quarterly financial statements in our quarterly reports filed electronically with the SEC. All reports and information filed by the Company can be found at the SEC’s website, www.sec.gov.

Transfer Agent

The transfer agent for our common stock is West Coast Stock Transfer, Inc. West Coast Stock Transfer’s telephone number is (619) 664-4780.

Financial Statements

Our consolidated financial statements are included in this prospectus, beginning on page F-1.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, and notes thereto, included elsewhere in this prospectus. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.

Business and Corporate History

We are a strategic real estate firm whose primary focus is acquiring commercial properties that face unique zoning challenges. Our diverse team of experienced professionals works to develop meaningful relationships with corporate and community partners. We focus on acquiring properties that have the potential to increase value within their surrounding communities and use turn-key development strategies to build long-term growth and value.

Our mission is to identify, develop, and manage sophisticated, safe, and sustainable properties for emerging industries.

We target commercial properties that can be acquired and potentially re-zoned for specific development purposes, including but not limited to, licensed medical marijuana dispensaries or cultivation facilities. The core of our business involves identifying and acquiring properties that exist within highly regulated zoning regions and may be candidates for re-zoning. This is an essential aspect of our overall growth strategy because we target uniquely zoned properties that are developed as candidates for specific industry operators. Once the properties have been acquired and/or re-zoned, their value may be substantially higher as demand for properties within the specific zoning region increases.

We manage a portfolio of properties that we own, lease, and provide direct development on each property we acquire. This can include complete architectural design and subsequent build-outs, general support, landscaping, general up-keep, facilities management, and state of the art security systems. During the nine months ended September 30, 2015, improvements made to rental properties amounted to $43,295. As of September 30, 2015, a summary of rental properties owned by us consisted of the following:

	Tempe, AZ			Gilbert, AZ		Green Valley Sahuarita, AZ		Chino Valley, AZ		Kingman, AZ
Description		Mixed -use warehouse/office			Land		Retail (special-use)		Greenhouse / Nursery		Retail (Special-Use)
Current Use		Medical marijuana cultivation  and packaging			Future development		Dispensary		Medical marijuana cultivation  and packaging		Dispensary
Date Acquired		March 2014			January 2014		October 2014		August 2015		May 2014
Lease Start Date		March 2014 to  August 2015			N/A		October 2014		August 2015		October 2014
Lease End Date		December 2015 to July 2035			N/A		September 2024		July 2035		September 2024
Total Rentable Sq. Ft.		82,355			0		1,440		38,799		1,497
Sq. Ft. rented as of September 30, 2015		57,355			N/A		1,440		15,000		1,497
Vacant Rentable Sq. Ft.		25,000			N/A		0		23,799		0
Land Area		4.93 Acres 214,772 Sq. Ft.			0.8 acres 34,717 Sq. Ft.		1.33 Acres 57,769 Sq. Ft.		31.9 Acres 1,389,564 Sq. Ft.		0.16 Acres 7,061 Sq. Ft
Total # of tenants		3			N/A		1		1		1
# of related party tenants		1			N/A		1		1		1
Annual Base Rent:
2015	$	414,577		$	-	$	109,425	$	120,000	$	139,800
2016		361,748			-		121,196		480,000		153,090
2017		375,905			-		127,256		514,500		160,745
2018		390,657			-		133,619		540,225		168,782
2019		406,030			-		140,300		567,236		177,221
Thereafter		4,630,439			-		767,584		13,559,697		969,579
Total	$	6,579,356		$	-	$	1,399,380	$	15,781,658	$	1,769,217
Annualized $ per rented Sq. Ft.
2015	$	9			-	$	76	$	22	$	93
2016	$	13	(1)		-	$	84	$	32	$	102
2017	$	14	(1)		-	$	88	$	34	$	107

(1) Assumes rented space of 27,355 Sq. Ft. since the third party lease representing 30,000 sq. ft. ends on December 31, 2015.

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Our common stock is quoted on the Pink Sheets under the symbol “ZDPY.” The last reported sale price of our common stock on the Pink Sheets was on September 30, 2015 for $18.00 per share. In the near future, we intend to apply to have our common stock quoted on the OTCQB® marketplace. If we apply to have our common stock quoted on the OTCQB®, there is no assurance that the application will be approved.

Recent Developments

On April 10, 2015, we became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein we alleged, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and had made material misrepresentations or had negligently misrepresented certain material elements upon which we relied in purchasing the land upon which that building was to be constructed, which the Defendants failed to deliver. On June 8, 2015, we filed a motion to dismiss the counterclaim. On July 9, 2015 and amended and made effective on August 1, 2015, we entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases.

Under the terms of the settlement:

1.	On August 1, 2015, we transferred title to its Bernalillo, New Mexico property to Defendants. At June 30, 2015 and December 31, 2014, the carrying value of this property was $2,719,658 and $2,737,863, respectively. In connection with such property, we forfeited quarterly straight-lined rental revenue of approximately of $287,000 through September 2024. For the nine months ended September 30, 2015, rental revenues from this property amounted to $150,000. The Company did not have rental revenue from this property in the comparable 2014 periods.
2.	The Defendants returned 2,496,054 shares of common stock to the Company and we cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired;
3.	The Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 Acres of land and we acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000.
4.	We shall obtain water rights associated with property in Chino Valley, Arizona.

In connection with the settlement agreement, we did not record any settlement gain or loss.

All of the settlement terms were effective as of August 1, 2015 except for us obtaining the water rights associated with property in Chino Valley, Arizona. The parties continue to work towards addressing this outstanding item. It is anticipated that the Company will complete the transfer of such water rights prior to December 31, 2015. In light of the progress made in resolving the post-conditions, on October 26, 2015, the parties filed a stipulation to dismiss this lawsuit with prejudice, each party to bear its own attorneys’ fees and costs. The court issued an order, filed on October 28, 2015, dismissing the case and retaining jurisdiction to enforce the settlement.

Results of Operations

The following comparative analysis on results of operations was based primarily on the comparative consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the years ended December 31, 2014 and 2013 and with the unaudited consolidated financial statements and the notes to those statements for the nine months ended September 30, 2015 and 2014, which are included elsewhere in this registration statement. The results discussed below are for the years ended December 31, 2014 and 2013 and for the nine months ended September 30, 2015 and 2014.

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Comparison of Results of Operations for the Years ended December 31, 2014 and 2013

Revenues

For the years ended December 31, 2014 and 2013, revenues consisted of the following:

	Year ended December 31,
	2014		2013
Rent revenues	$	327,387	$	-
Rent revenues – related party		140,527		-
Total revenues	$	467,914	$	-

For the year ended December 31, 2014, total revenues amounted to $467,914, including related party revenue of $140,527, as compared to zero for the year ended December 31, 2013. In March 2014, we began recording revenue from the lease of our properties. We did not own any rental properties in 2013.

Operating expenses

For the year ended December 31, 2014, operating expenses amounted to $5,947,862 as compared to $571,236 for the year ended December 31, 2013, an increase of $4,577,825 or 801.4%. For the years ended December 31, 2014 and 2013, operating expenses consisted of the following:

	Year ended December 31,
	2014		2013
Compensation and benefits	$	3,918,440	$	274,161
Professional fees		932,510		173,186
General and administrative expenses		148,157		43,889
Depreciation and amortization		99,822		-
Property operating expenses		75,069		-
Real estate taxes		63,447		-
Consulting fees - related parties		35,417		80,000
Impairment loss on building – related party		675,000		-
Total	$	5,947,862	$	571,236

● For the year ended December 31, 2014, compensation and benefit expense increased by $3,644,279 or 1,329.2% as compared to the year ended December 31, 2013. The increase was primarily attributable to:

1. The issuance of super voting control preferred stock on December 20, 2013 and July 22, 2014 (herein referred to as the “Valuation Dates”. The Company assessed the fair value of the preferred stock issued to MAC CAM, Gregory Johnston and McLaren Family LLLP for purposes of determining the valuation as set forth in ASC 820–10–35–37 Fair Value in Financial Instruments. We utilized the market approach, on the valuation dates, for the year ended December 31, 2014, the Company recorded stock-based compensation of $3,365,000 as compared to $188,363 for the year ended December 31, 2013, an increase of $3,176,637. The preferred stock issued was valued based upon industry specific control premiums and our market cap at the time of the transactions. The market approach was utilized to arrive at an indication of equity value by using equity based transactions common stock prices (the market data was deemed unreliable due to the limited trading) on July 22, 2014. The control premium for the Company was based on publicly traded companies or comparable entities which have been recently acquired in arm’s–length transactions. We estimated the control premium for the voting control of the preferred stock based on Real Estate industries at 17.5% as of July 22, 2014 and 18.48% at December 2013.

2. During the year ended December 31, 2014, we recorded stock-based compensation of $250,000 related to the issuance and subsequent cancellation of common shares to the Company’s chief executive officer, and,

3. We commenced operating activities.

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● For the year ended December 31, 2014, professional fees, consisting of accounting fees, legal fees, consulting fees, transfer agent fees, architecture fees, and other fees, increased by $759,324, or 438.4%, as compared to the year ended December 31, 2013. The increase was attributable to an increase in consulting fees of approximately $604,000 relating to hiring of various consultants for business development services (includes stock based consulting fees of approximately $493,000), and an increase in legal fees of $117,872. We used consultants to assist us with introductions to potential business partners and customers, to help us with public relations services including helping us find market makers, broker-dealers, and sources of capital, advise us on construction of indoor, outdoor and greenhouse agricultural systems, assist us with agricultural licensing and zoning, and assistance with development of business modeling, market development and advise concerning equity and debt financings.

● General and administrative expenses consist of expenses such as rent expense, directors and officer’s liability insurance, travel expenses, office expenses, telephone and internet expenses and other general operating expenses. For the year ended December 31, 2014, general and administrative expenses increased by $104,268 or 237.6% as compared to the year ended December 31, 2013. These increases were primarily attributable to a substantial increase in operating activities to implement our business plan to acquire properties and include an increase in rent expense of $21,313, an increase in insurance expense of $29,163, an increase in travel expenses of $17,589, and increases in other general and administrative expenses.

● For the year ended December 31, 2014, depreciation and amortization expense amounted to $99,822 as compared to zero for the year ended December 31, 2013. In 2014, we acquired rental properties, and property and equipment.

● Property operating expenses consist of property management fees, property insurance, repairs and maintenance fees, utilities and other expenses related to our rental properties. For the year ended December 31, 2014, property operating expenses amounted to $75,069 as compared to zero for the year ended December 31, 2013. In 2014, we acquired rental properties and hired a management company to manage our Tempe property and began incurring expenses such as management fees, utilities, and maintenance fees.

● For the year ended December 31, 2014, real estate taxes amounted to $63,447 as compared to zero for the year ended December 31, 2013. In 2014, we acquired rental properties and began accruing such taxes.

● For the year ended December 31, 2014, consulting fees – related parties amounted to $35,417 as compared to $80,000 the year ended December 31, 2013, a decrease of $44,583 or 55.7%. In 2013, we issued our common shares for services and recorded consulting fees – related parties expense of $80,000. We did not incur stock-based consulting fees in 2014. During the year ended December 31, 2014, we incurred consulting fees of $35,417 in connection with an employment agreement with a related party.

● For the year ended December 31, 2014, impairment loss on building amounted to $675,000 as compared to zero for the year ended December 31, 2013. On January 29, 2014, we entered into a purchase and consulting agreement with Ultra Health pursuant to which we were to acquire a 1,536 square foot modular building to be delivered and erected on purchased land for total cash payments of $675,000. In connection with this modular building, on April 10, 2015, we became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona, wherein we alleged, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which we relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. We review our rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, we determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss of $675,000. The case was settlement on August 1, 2015 and is discussed elsewhere.

Loss from operations

As a result of the factors described above, for the year ended December 31, 2014, loss from operations amounted to $5,479,948 as compared to $571,236 for the year ended December 31, 2013, an increase of $4,908,712 or 859.3%.

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Other income (expenses)

Other expenses includes interest expense and other income. For the year ended December 31, 2014, total other expenses, net amounted to $260,418 as compared to $220,769, an increase of $39,649 or 18.0%. This increase was attributable to an increase in interest expense of $80,669 primarily attributable to the increase in borrowing pursuant to a mortgage payable of $131,250, and convertible notes payable of $25,081 offset by a decrease in amortization of debt discount of $76,721. Additionally, for the year ended December 31, 2014, we recognized other income of $41,020 from the sale of a note receivable compared to zero for the year ended December 31, 2013.

Net loss

As a result of the foregoing, for the years ended December 31, 2014 and 2013, net loss amounted to $5,740,366, or $0.72 per common share, and $792,005, or $14.40 per common share, respectively.

Comparison of Results of Operations for the Nine Months ended September 30, 2015 and 2014

Revenues

For the nine months ended September 30, 2015 and 2014, revenues consisted of the following:

	Nine months ended September 30,
	2015		2014
Rent revenues	$	297,695	$	222,694
Rent revenues – related party		625,370		-
Total revenues	$	923,065	$	222,694

For the nine months ended September 30, 2015, total revenues amounted to $923,065, including related party revenues of $923,065, as compared to $222,694 for the nine months ended September 30, 2014, an increase of $700,371 or 314.5%. In March 2014, we began recording revenue from the lease of our properties.

Operating expenses

For the nine months ended September 30, 2015, operating expenses amounted to $1,899,644 as compared to $5,005,048 for the nine months ended September 30, 2014, a decrease of $3,105,404 or 62.1%. For the nine months ended September 30, 2015 and 2014, operating expenses consisted of the following:

	Nine months ended September 30,
	2015		2014
Compensation and benefits	$	298,411	$	3,873,809
Professional fees		1,011,008		866,220
General and administrative expenses		198,516		94,786
Depreciation and amortization		110,060		74,252
Property operating expenses		104,016		54,208
Real estate taxes		56,622		27,606
Consulting fees - related parties		53,511		14,167
Settlement expense		67,500		-
Total	$	1,899,644	$	5,005,048

● For the nine months ended September 30, 2015, compensation and benefit expense decreased by $3,575,398 or 92.3% as compared to the nine months ended September 30, 2014. The decrease was primarily attributable to:

1. The issuance of super voting control preferred stock on December 20, 2013 and July 22, 2014 (herein referred to as the “Valuation Dates”. The Company assessed the fair value of the preferred stock issued to MAC CAM, Gregory Johnston and McLaren Family LLLP for purposes of determining the valuation as set forth in ASC 820–10–35–37 Fair Value in Financial Instruments. On the Valuation date, we utilized the market approach and for the nine months ended September 30, 2014, we recorded stock-based compensation of $3,365,000. We did not incur such expense during the 2015 period. The preferred stock issued was valued based upon industry specific control premiums and our market cap at the time of the transactions. The market approach was utilized to arrive at an indication of equity value by using equity based transactions common stock prices (the market data was deemed unreliable due to the limited trading) on July 22, 2014. The control premium for the Company was based on publicly traded companies or comparable entities which have been recently acquired in arm’s–length transactions. We estimated the control premium for the voting control of the preferred stock based on Real Estate industries at 17.5% as of 7/22/14.

2. During the nine months ended September 30, 2014, we recorded stock-based compensation of $250,000 related to the issuance and subsequent cancellation of common shares to the Company’s chief executive officer.

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● For the nine months ended September 30, 2015, professional fees increased by $144,788, or 16.7%, as compared to the nine months ended September 30, 2014. The increase was attributable to an increase in legal fees of $178,880 attributable to legal matters as discussed in recent developments, an increase in accounting fees of $29,711 attributable to our financial audits and increased accounting needs, and an increase in architectural fees incurred to develop standard build-out plans for future developments of $28,500, offset by a decrease in consulting fees of $89,377 related to a reduction in use of consultants. We used consultants to assist us with introductions to potential business partners and customers, to help us with public relations services including helping us find market makers, broker-dealers, and sources of capital, advise us on construction of indoor, outdoor and greenhouse agricultural systems, assist us with agricultural licensing and zoning,   and assistance with development of business modeling, market development and advice concerning equity and debt financings.

● General and administrative expenses consist of expenses such as rent expense, directors and officer’s liability insurance, travel expenses, office expenses, telephone and internet expenses and other general operating expenses. For the nine months ended September 30, 2015, general and administrative expenses increased by $103,730 or 109.4% as compared to the nine months ended September 30, 2014. These increases were primarily attributable to an increase in rent expense of $25,250, an increase in insurance expense of $57,743, and an increase in travel expenses of $10,971 and increases in other general and administrative expenses of $9,766.

● For the nine months ended September 30, 2015, depreciation and amortization expense amounted to $110,060 as compared to $74,252 for the nine months ended September 30, 2014, an increase of $35,808 or 48.2%, attributable to an increase in depreciable assets.

● Property operating expenses consist of property management fees, property insurance, repairs and maintenance fees, utilities and other expenses related to our rental properties. For the nine months ended September 30, 2015, property operating expenses amounted to $104,016 as compared to $54,208 for the nine months ended September 30, 2014, an increase of $49,808 or 91.9% attributable to an increase in fees paid to a third party management company to manage our properties and to an increase in rental properties. In the third quarter of 2015, we terminated the use of a management company and now we manage all of the properties.

● For the nine months ended September 30, 2015, real estate taxes amounted to $56,622 as compared to $27,606 for the nine months ended September 30, 2014, an increase of $29,016 or 105.1%. In 2015 and 2014, we acquired additional rental properties and began incurring such taxes.

● For the nine months ended September 30, 2015, consulting fees – related parties amounted to $53,511 as compared to $14,167 for the nine months ended September 30, 2014, an increase of $39,344 or 277.7%. Beginning in August 2014, we began incurred consulting fees in connection with an employment agreement with a related party. In August 2015, this employment agreement was terminated.

● For the nine months ended September 30, 2015, settlement expense amounted to $67,500 as compared to zero for the nine months ended September 30, 2014. During the nine months ended September 30, 2015, we settled certain litigation and a claim by paying cash of $17,500 and by issuing 50,000 shares of our common stock with a fair value of $50,000.

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Loss from operations

As a result of the factors described above, for the nine months ended September 30, 2015, loss from operations amounted to $976,579 as compared to $4,782,354 for the nine months ended September 30, 2014, a decrease of $3,805,775 or 79.9%.

Other income (expenses)

Other expenses includes interest expense and other income. For the nine months ended September 30, 2015, total other expenses, net amounted to $168,591 as compared to $203,546, a decrease of $34,955 or 17.2%. This decrease was attributable to:

● a decrease in interest expense of $72,990 primarily attributable to a decrease in amortization of debt discount of $142,564 offset by an increase in interest expense of $26,250 related to a mortgage payable dated March 2014, and an increase of $44,911 related to an increase in convertible debt, and,

● an increase in interest income of $439, offset by:

● a decrease in other income of $38,474. For the nine months ended September 30, 2014, we recognized other income of $41,019 from the sale of a note receivable compared to zero for the nine months ended September 30, 2015.

Net loss

As a result of the foregoing, for the nine months ended September 30, 2015 and 2014, net loss amounted to $1,145,170, or $0.06 per common share, and $4,985,900, or $1.15 per common share, respectively.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had cash of $1,358,399 and $1,066,377 of cash as of September 30, 2015 and December 31, 2014, respectively.

Our primary uses of cash have been for salaries, fees paid to third parties for professional services, property operating expenses, general and administrative expenses, and the acquisition of rental properties. All funds received have been expended in the furtherance of growing the business. The following trends are reasonably likely to result in changes in our liquidity over the near to long term:

● An increase in working capital requirements to finance our current business,

● Acquisition and buildout of rental properties;

● Addition of administrative and sales personnel as the business grows, and

● The cost of being a public company.

We currently have material commitments for capital expenditures amounting to approximately $1,383,500 for the acquisition of rental properties. We need to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will be sufficient to satisfy our cash requirements under our present operating expectations for the next 12 months. Other than revenue received from the lease of our rental properties, funds received from the sale of our common stock and funds received from debt, we presently have no other significant alternative source of working capital. We have used these funds to fund our operating expenses, pay our obligations, acquire rental properties, and grow our company. We need to raise significant additional capital or debt financing to acquire new properties, to develop existing properties, and to assure we have sufficient working capital for our ongoing operations and debt obligations. We do not anticipate we will be profitable in the rest of fiscal 2015. Therefore, our future operation is dependent on our ability to manage our current cash balances and on the collection of rental revenues. We intend on securing additional financing to acquire and develop additional and existing properties. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow our business operations.

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Recent financings

During the quarter ended March 31, 2014, we issued 48,980 shares of restricted common stock at a price of $120 per share to approximately 28 accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended. In July 2014, we cancelled 83 shares and returned proceeds of $10,000 to an investor. The total proceeds we received from this private placement were approximately $5,858,000 and a subscription receivable of $4,000.

In July 2014, we issued 16,637,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended, at a price of $0.01 per share for proceeds of $166,370.

On August 20, 2014, we received an aggregate of $1,000,000 from Greg Johnston, a beneficial stockholder and stockholder pursuant to the terms of Senior Convertible Debentures. The Debentures bear interest at 7% and the principal balance and all accrued interest is due on the maturity date of August 20, 2017. The holders have the option after 12 months to convert all or a portion of the Debentures into shares of the Company’s common stock at the conversion price of $5.00 per share. As of September 30, 2015, the principal and accrued interest balances due and owing under these Debentures is $1,000,000 and $38,792, respectively. As of December 31, 2014, the principal and accrued interest balances due and owing under these Debentures is $1,000,000 and $12,542, respectively.

From August 2014 to December 2014, we issued 1,850,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended at a price of $1.00 per share for proceeds of $1,850,000.

In May 2015, we issued 1,000,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended, at a price of $1.00 per share for proceeds of $1,000,000.

Cash Flow

For the year ended December 31, 2014 and 2013

Net cash flow used by operating activities was $828,479 for the year ended December 31, 2014 as compared to $147,449 for the year ended December 31, 2013, an increase of $681,030.

● Net cash flow used in operating activities for the year ended December 31, 2014 primarily reflected a net loss of $(5,740,366) adjusted for the add-back of non-cash items consisting of depreciation and amortization of $99,821, stock-based compensation expense of $4,100,344, impairment loss on building of $675,000, amortization of debt discount of $142,564, and a non-cash increase in deferred rent receivables of $(28,027), and changes in operating assets and liabilities primarily consisting of an increase in real estate tax escrow of $39,122, and an increase in prepaid expenses and other assets of $132,171, offset by an increase in accounts payable of $27,835, accrued expenses of $43,603, and accrued expenses – related parties of $51,984.

● Net cash flow used in operating activities for the year ended December 31, 2013 was primarily attributable to our net loss of $792,005 adjusted for the add-back of non-cash items consisting of stock-based compensation of $423,787 and amortization of debt discount of $219,285, offset by changes in operating assets and liabilities of $1,484.

Net cash flow used in investing activities reflects the purchase of property and equipment, and rental properties, which consists of land and buildings and improvements, of $9,303,799 and $0 for the years ended December 31, 2014 and 2013, respectively. For the year ended December 31, 2014, we received proceeds from the sale of a note receivable of $211,020 compared to $0 for the year ended December 31, 2013.

Net cash provided by financing activities was $10,975,671 for the year ended December 31, 2014 as compared to $159,413 for the year ended December 31, 2013. During the year ended December 31, 2014, we received proceeds from the sale of common stock of $7,874,371, proceeds from convertible debt of $1,000,000 net proceeds from the sale of preferred stock of $1,300, and proceeds from mortgage payable of $2,100,000. During the year ended December 31, 2013, we received proceeds from convertible debt of $159,413.

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For the Nine Months Ended September 30, 2015 and 2014

Net cash flow used by operating activities was $455,472 for the nine months ended September 30, 2015 as compared to $819,975 for the nine months ended September 30, 2014, a decrease of $364,503.

● Net cash flow used in operating activities for the nine months ended September 30, 2015 primarily reflected a net loss of $(1,145,170) adjusted for the add-back of non-cash items consisting of depreciation and amortization of $110,060, stock-based compensation expense of $633,386, stock-based settlement expense of $50,000, and a non-cash increase in deferred rent receivables of $(205,400), and changes in operating assets and liabilities primarily consisting of a decrease in real estate tax escrow of $20,872 offset by an increase in accounts payable of $40,407, an increase in accrued expenses of $64,610, and an increase in security deposits payable of $22,963.

● Net cash flow used in operating activities for the nine months ended September 30, 2014 was primarily attributable to our net loss of $(819,975) adjusted for the add-back of non-cash items consisting of depreciation and amortization of $74,252, stock-based compensation of $4,051,270, amortization of debt discount of $142,564 and gain from sale of note receivable of $(41,019), offset by changes in operating assets and liabilities of $(61,142).

Net cash flow used in investing activities was $250,256 for the nine months ended September 30, 2015 as compared to $8,690,070 for the nine months ended September 30, 2014. For the nine months ended September 30, 2015, we purchased property and equipment of $6,961, acquired a parcel of land for $200,000, and made building improvements of $43,295. For the nine months ended September 30, 2014, we used cash to acquire land, building and improvements of $8,855,980 and property and equipment of $45,109, offset and received proceeds from the sale of a note receivable of $211,019.

Net cash provided by financing activities was $997,750 for the nine months ended September 30, 2015 as compared to $10,825,670 in the same period in 2014. During the nine months ended September 30, 2015, we received proceeds from the sale of common stock of $1,000,000 offset by the redemption of common stock of $2,250. During the nine months ended September 30, 2014, we received proceeds from the sale of common stock of $7,734,370, proceeds from convertible debt of $1,000,000, proceeds from a mortgage payable of $2,100,000 and net proceeds from the sale of preferred stock of $1,300, offset by the redemption of common stock for $10,000.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.

The following tables summarize our contractual obligations as of September 30, 2015 (dollars in thousands), and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

	Payments Due by Period
Contractual obligations:	Total		Less than 1 year		1-3 years		3-5 years		5+ years
Convertible notes	$	1,000	$	-	$	1,000	$	-	$	-
Mortgage payable		2,100		-		-		2,100		-
Total	$	3,100	$	-	$	1,000	$	2,100	$	-

Off-balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

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Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our audited and unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the unaudited consolidated financial statements.

Rental Properties

Rental properties are carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of rental properties are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 7 to 39 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. We record acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. We amortize acquired above-and below-market leases as a decrease or increase to rental income, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of depreciation and amortization.

Our properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If our estimates of the projected future cash flows, anticipated holding periods, or market conditions change, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses.

We have capitalized land, which is not subject to depreciation.

Revenue recognition

Rental income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of rent steps and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. Rental income also includes the amortization of acquired above-and below-market leases, net. Beginning in 2014, we began generating revenues from the non-residential rental properties.

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Certain of our leases currently contain rental increases at specified intervals. We record as an asset, and include in revenue, rents receivable that will be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Deferred rents receivable in the accompanying balance sheets includes the cumulative difference between rental revenue recorded on a straight-line basis and rents received from the tenants in accordance with the lease terms. Accordingly, management determines to what extent the deferred rent receivable applicable to each specific tenant is collectible. We review material rents receivable and takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of rent receivable with respect to any given tenant is in doubt, we record an increase in the allowance for uncollectible accounts or we record a direct write-off of the specific rent receivable. For the year ended December 31, 2014, in connection with certain related party leases, we only included in revenues the amount of rents received from the related parties in accordance with the lease terms since on August 1, 2015, we transferred title to its Bernalillo, New Mexico and the respective related party lease as part of a settlement agreement discussed elsewhere herein, and cancelled a related party lease in June 2015.

Stock-based compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We initially record compensation expense based on the fair value of the award at the reporting date.

Recent Accounting Pronouncements

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016. We are currently evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation. ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting. ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015. We are currently evaluating the impact of the adoption of ASU 2014-12 on our consolidated financial statements.

In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, that will require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management will assess if there is substantial doubt about an entity’s ability to continue as a going concern within one year after the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. The new standard defines substantial doubt and provides example indicators. Disclosures will be required if conditions give rise to substantial doubt. However, management will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. This standard is effective for public entities for annual periods ending after December 15, 2016. Earlier application of this standard is permitted. This standard is not expected to have a material effect on our financial position, results of operations and cash flows.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

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MANAGEMENT

Members of our board of directors are elected by the stockholders to a term of one year and serve until their successors are elected and qualified. Our officers are appointed by our board to a term of one year and serve until their successors are duly appointed and qualified, or until the officer is removed from office. While our board has established a compensation committee, we have not yet established a nominating and corporate governance committee or an audit committee.

Set forth below is certain information regarding our executive officers and directors.

Name	Age	Position
Bryan McLaren	28	Chief Executive Officer, President, Treasurer, Secretary and Director
Patricia Haugland	47	Chief Operating Officer
Adam Wasserman	51	Chief Financial Officer
Irvin Rosenfeld	62	Director
Art Friedman	54	Director
Alex McLaren, MD	63	Director

Bryan McLaren is the son of Alex McLaren.

Background Information about our Officers and Directors

Bryan McLaren. Mr. McLaren has a dedicated history of work in the sustainability industry and in business development. Prior to his appointment as President, CEO and a director of our company in April 2014, Mr. McLaren was recruited as our Chief Sustainability Officer and VP of Operations. Before joining the Company, from February 2013 to February 2014, Mr. McLaren worked as a sustainability consultant for Waste Management, Inc., where he served as a Project Manager for the Arizona State University account. Prior to 2013, Mr. McLaren worked as a Sustainability Manager for Northern Arizona University and as a Sustainability Commissioner for the City of Flagstaff, Arizona. Mr. McLaren has served as a member of our board of directors during April 2014 and since June 2014. Mr. McLaren’s business development experience, along with his knowledge of our business, has led our board of directors to conclude that he should continue to serve as a director and in his current roles.

Patricia Haugland. Ms. Haugland has served as our Chief Operating Officer since May 1, 2015. Prior to joining Zoned Properties and throughout the past five years, Ms. Haugland ran an independent brokerage in Arizona. She is a real estate and business professional with more than 25 years of experience and millions of dollars’ worth of property transactions under her belt. A native of Chicago, Ms. Haugland began her career in training and development, successfully launching her own national company specializing in tech, legal, banking and telecom. Following her arrival in Arizona, Haugland, effectively leveraged her corporate training background to groom successful brokers and agents, and eventually created one of the largest independent real estate brokerages in the country. Haugland is strongly focused and an astute negotiator, having built and sold several profitable businesses, and has helped clients and companies selectively and strategically build high-performance real estate investment portfolios.

Adam Wasserman. Mr. Wasserman has served as our Chief Financial Officer since October 1, 2015 and has served as an advisory CFO since July 10, 2014. Mr. Wasserman has been a majority shareholder and chief executive officer of CFO Oncall, Inc. (“CFO Oncall”) since 1999. CFO Oncall provides chief financial officer services to a number of companies. Through CFO Oncall, Mr. Wasserman serves and has served as the chief financial officer of a number of private and publicly held companies. From June 1991 to November 1999 Mr. Wasserman was a Senior Audit Manager at American Express Tax and Business Services, in Fort Lauderdale, Florida where his responsibilities included supervising, training and evaluating senior accounting staff members, work paper review, auditing, maintaining client relations, preparation of tax returns and financial statements. From September 1986 to May 1991, Mr. Wasserman was employed by Deloitte & Touche, LLP where his assignments included public and private company audits and Securities and Exchange Commission reporting, tax preparation and planning, management consulting, systems design, staff instruction and recruiting. Mr. Wasserman is a member of the American Institute of Certified Public Accountants. Mr. Wasserman holds a Bachelor of Science Degree in Accounting from the State University of New York at Albany.

Irvin Rosenfeld. Mr. Rosenfeld is currently a Registered Representative with Newbridge Securities Corporation and has worked in that capacity throughout the past five years. He has over 28 years of experience in the financial industry and is an accomplished author, including his book “My Medicine” published in 2010. Mr. Rosenfeld has appeared on dozens of television news programs and in print media. Mr. Rosenfeld has served as a member of our board of directors during April 2014 and since June 2014. Mr. Rosenfeld’s knowledge of our business and the emerging medical marijuana industry has led our board of directors to conclude that he should continue to serve as a director. We believe that Mr. Rosenfeld’s background in the financial services industry provides us with important guidance as we seek to access US capital markets and qualifies him to serve on our board of directors.

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Art Friedman. Mr. Friedman, who was appointed as a director on October 1, 2014, has served as Owner/Principal of Triple J Management Services, which specializes in consulting and professional services for the alcoholic beverage industry. Art was most recently President and CEO of Gold Coast Beverage Distributors, a position he held for the last 10 years of his 23 years with the company. During his tenure as President/CEO, Gold Coast more than tripled sales revenue and increased EBITDA by more than five-fold. Over the same period, Mr. Friedman led significant market share gains through organic growth as well as consolidating wholesaler acquisitions. Mr. Friedman began his career with General Foods Corporation, now part of Kraft Foods. He has served on the distributor advisory councils of Diageo-Guinness, Heineken USA, InBev and Miller-Coors. Mr. Friedman graduation Cum Laude with a Bachelor of Science in Business Management from the University of Florida, Warrington School of Business. We believe that Mr. Friedman’s background as an advisor in the area of business management and his experience in operating, growing and advising companies provides us with the requisite skills and qualifications to serve on our board.

Alex McLaren, MD. Dr. McLaren, who has served as a director since October 1, 2014, serves as the Program Director for the Banner Orthopedic Residency Program and has served in that capacity throughout the past five years. After graduating from Queen’s University School of Medicine, Kingston, Ontario, Canada in 1977, Dr. McLaren completed an orthopedic residency at the University of Western Ontario in 1982 and a fellowship at the University of Southern California in 1983. Dr. McLaren is first and foremost an orthopedic educator and researcher whose career has included teaching, research and administration of educational programs. His clinical interest includes orthopedic infections, revision arthroplasty and complex musculoskeletal trauma. With hundreds of publications, numerous grand-funded projects, and medical association postings, Dr. McLaren has established a prized reputation in his field. We believe that Dr. McLaren’s Services provided to numerous organizations and provides us with the requisite skills and qualifications to serve on our board.

Involvement in Certain Legal Proceedings

No director, executive officer, significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

Board of Directors and Board Committees

Our board currently consists of four directors. Our board has established the following committees: a compensation committee, and plans to establish an Audit Committee and a Nominating and Corporate Governance Committee before the end of 2015. The composition and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board.

Two of our four board members are independent. The board has determined that each of Messrs. Friedman and Rosenfeld are independent directors pursuant to the requirements of Nasdaq.

Compensation Committee

Messrs. Friedman and Rosenfeld and Dr. McLaren serve on our compensation committee. Mr. Friedman, an independent director, is the chair of the compensation committee. The committee is responsible for discharging the board’s responsibility relating to compensation of our executive officers and directors, evaluating the performance of our executive officers in light of our goals and objectives and recommending to the board for approval our compensation plans, policies and programs.

Code of Ethics

We have adopted a code of business conduct and ethics as part of our Employee Handbook that applies to all of our employees, officers and directors, including those officers responsible for financial reporting.

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EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us for the years ended December 31, 2014 and 2013 for each individual serving as our principal executive officer during such year.

2014 Summary Compensation Table

Name and principal position	Year		Salary $		Bonus $		Stock Awards $		Option Awards $		Non-Equity Incentive Plan Compensation $		Nonqualified Deferred Compensation Earnings $	All Other Compensation $			Total $
Bryan McLaren, Chief Executive Officer		2014	$	69,845		-		-		-		-	-		-	$	69,845
and President (1)		2013		-		-		-		-		-	-		-		-
Marc Brannigan, President and		2014		70,113		-		-		-		-	-		32,500		102,613
Chief Executive Officer (2)		2013		25,250		-		40,000		-		-	-		-		65,250

(1)	Mr. McLaren was appointed as our Chief Executive Officer and President on March 30, 2014.
(2)	Mr. Brannigan resigned as an executive officer of our company on March 30, 2014. Mr. McLaren replaced him as Chief Executive Officer and President on the same date. 2014 compensation includes payments of $32,500 to a company owned by Mr. Brannigan. 2013 compensation includes the issuance of 1,667 shares of common stock at $24.00 per share.

Narrative Disclosure to Summary Compensation Table

Except as otherwise described below, there are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or our subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Employment Agreements

On July 31, 2014, we entered into an employment agreement with Mr. McLaren pursuant to which we agreed to pay Mr. McLaren an annual salary of $120,000. In addition, Mr. McLaren may elect to receive an option to purchase up to 25,000 shares our common stock per year of completed service. The employment agreement has a term of 10 years. Pursuant to the terms of Mr. McLaren’s employment agreement, we may terminate the agreement upon a change of control with 90 days’ written notice.

On May 1, 2015, we entered into an employment agreement with Ms. Haugland pursuant to which we agreed to employ Ms. Haugland as our Chief Operating Officer and to pay Ms. Haugland an annual salary of $100,000, plus 15,000 shares of our common stock for the first year of her employment. Thereafter, her compensation shall be determined by the compensation committee. In addition, Ms. Haugland received a signing bonus of an option to purchase 50,000 shares of our common stock at an exercise price of $1.00 per share. Ms. Haugland also is entitled to participate in any bonus program implemented by the compensation committee for senior executives, and in any executive stock award plan adopted by the board of directors. In addition, Ms. Haugland will also be granted 250,000 shares from our employee stock option plan, over a five-year period, with 50,000 shares being granted each year beginning on the first anniversary of entry into the employment agreement.

Ms. Haugland’s employment agreement has a term of five years, and automatically renews for successive one-year terms unless either party to the agreement gives written notice of termination at least 60 days prior to the expiration of the then current term. The employment agreement may be terminated by us (i) at any time for cause, (ii) at any time without cause upon 30 days’ advance notice to Ms. Haugland, and (iii) at any time during the probationary period. The agreement may be terminated by Ms. Haugland (i) at any time with 30 days’ advance notice to us, (ii) at any time if we materially breach the agreement and fails to cure the breach within 30 days of written notice of the breach, provided that Ms. Haugland has given notice of the breach within 90 days after she has knowledge of such breach and we did not have cause to terminate Ms. Haugland at the time such breach occurred. In addition, the employment agreement will terminate automatically if Ms. Haugland does not accept assumption of the agreement by, or an offer of employment from, a purchaser of all or substantially all of our assets.

If Ms. Haugland’s employment is terminated by us without cause, or pursuant to the provisions relating to material breach of the agreement by us, in either case other than within two years after a change of control, we will continue to pay Ms. Haugland’s annual salary for the duration of the initial five-year term or any renewal term.

Outstanding Equity Awards at Fiscal Year-End

No executive officer received any equity awards, or holds exercisable or unexercisable options, as of December 31, 2014.

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Long-Term Incentive Plans

There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for directors or executive officers.

Compensation of Directors

Each non-employee director receives 10,000 shares of our common stock per year of service. Mr. McLaren does not receive any additional compensation for his service as a member of our board of directors.

2014 Director Compensation

Name	Fees earned or paid in cash ($)		Stock awards ($)		Option awards ($)		Non-equity incentive plan compensation ($)		Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Irvin Rosenfeld		-	$	10,000		-		-		-		-	$	10,000
Art Friedman		-		10,000		-		-		-		-		10,000
Alex McLaren		-		10,000		-		-		-		-		10,000

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Safford Note

In December 2013, the Company closed a Note Purchase and Loan Participation Assignment Agreement (“Note Purchase Agreement”) with and amongst MAC CAM LLC, a company partially owned by Marc Brannigan, the Company’s former president, Cumbre Investments LLC, a company owned by Duke Rodriguez (formerly a principal stockholder), a third party entity, and four individual investors who are related parties (Marc Brannigan, Duke Rodriguez, Christopher Carra and Alan Abrams), and a third party, pursuant to which the Company issued 8,333 shares of common stock of the Company and two convertible promissory notes (see convertible Notes Payable below) in total amount of $170,000 to purchase a Promissory Note (referred to as the “Safford Note”), dated February 19, 2013, in the original principal amount of $209,400 and with a maturity date of February 1, 2018, which is secured by a Mortgage/Deed of Trust on Real Property recorded March 5, 2013 in Document No. 2013-01174, of the Official Records of the County Recorder of Graham County, Arizona. On March 12, 2014, the Safford Note was paid to us and we received a cash payment of $210,500.

Convertible Notes Payable

From September 2013 to December 2013, the Company borrowed funds from MAC CAM, a limited liability company partially owned by the Company’s former President, in the aggregate amount of $159,413 to cover its daily operations, including but not limited to, consulting and advisory fees, accounting fees, legal fees, compliance fees and others general and administrative expenses. The borrowings were evidenced by four convertible promissory notes, dated on September 30, 2013 (“September Note”), October 31, 2013 (“October Note”), November 30, 2013 (“November Note”) and December 31, 2013 (“December Note”).

The September Note and October Note accrued annual interest at 8% per annum and the November Note and December Note accrued interest at 10% per annum. In connection with the September Note and October Note, the holder of the Notes has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors at fixed conversion prices of $6.00 and $6.00 per common share, respectively. In connection with the November Note and December Note, the holder of the Notes has an option to convert all or any portion of unpaid principal balance of the Notes into the common stock of the Company or its successors at fixed conversion prices of $6.00 and $12.00 per common share, respectively. We evaluated whether or not these convertible notes contained embedded conversion options, which meet the definition of a derivatives under ASC Topic 815. We concluded that since the convertible notes had fixed conversion prices, the convertible notes were not derivative instruments. We analyzed this provision under ASC Topic 815 and therefore it qualified as equity under ASC Topic 815. The convertible notes were considered to have embedded beneficial conversion features (BCF) because the effective conversion price was less than the fair value of the Company’s common stock on the respective note dates. The convertible notes were fully convertible at the issuance date. Accordingly, the intrinsic value of the beneficial conversion features were calculated to be $128,406 and was recorded as a debt discount and was amortized over the respective note term. For the years ended December 31, 2014 and 2013, amortization of debt discount related to these convertible notes amounted to $79,121 and $49,285, respectively, and has been included in interest expense – related party on the accompanying consolidated statements of operations. On March 5, 2014, we issued a total of 22,942 shares of common stock of the Company to settle all principal and interest obligations pursuant to these convertible notes payable.

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On December 9, 2013, in connection with the Note Purchase Agreement discussed above, we issued a convertible promissory note in the amount of $85,000 to MAC CAM. The Note bear an interest rate of 10% per annum and was due on December 9, 2014, pursuant to which the holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 50% of the market bid price of the common stock on the demand date for conversion. Pursuant to ASC Topic 470-20-525 (Debt with conversion and other options), since this convertible note had fixed conversion percentages of 50% of the stock price, we determined it had a fixed monetary amount that can be settled for the debt. Accordingly, at December 31, 2013, we recorded an embedded conversion option liability amounting to $85,000 on the accompanying consolidated balance sheet since this convertible note is convertible for the conversion premium and recorded interest expense – related party of $85,000. At December 31, 2013, principal amount due under this convertible note amounted to $85,000. On January 29, 2014, MAC CAM fully converted this note and all unpaid interest into 720 shares of the Company’s common stock. Accordingly, on the date of conversion, the embedded conversion option liability of $85,000 was reclassified to additional paid-in capital.

On August 20, 2014, we received $500,000 from Greg Johnston, a beneficial stockholder pursuant to the terms of a Senior Convertible Debenture. The Debenture bears interest at 7% and the principal balance and all accrued interest is due on the maturity date of August 20, 2017. The holder has the option after 12 months to convert all or a portion of the Debenture into shares of the Company’s common stock at the conversion price of $5.00 per share. As of December 31, 2014, the principal and accrued interest balances due and owing under this Debenture is $500,000 and $12,542, respectively. As of September 30, 2015, the principal and accrued interest balances due and owing under this Debenture is $500,000 and $38,792, respectively.

Notes Payable - Related Party

On January 31, 2014, we received $200,387 from Alan Abrams, a beneficial stockholder. Pursuant to the terms of the loan, the loan bears interest at 10% and is due on February 14, 2014. On February 11, 2014, the balance due was repaid in full.

Preferred Stock Issuance

On December 20, 2013, the board of directors of the Company approved the issuance of 700,000 shares of preferred stock to MAC CAM for professional services in connection with setting up the business with respect to commercial properties acquisition and management that face unique zoning challenges, and running the daily operations of the Company. The 700,000 shares of preferred stock are not convertible into any other class or series of stock, the holder of which are entitled to 50 votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding. On July 22, 2014, these 700,000 shares were redeemed by the Company under an agreement with the stockholder at a cost of $700.

On July 22, 2014, the board of directors accepted a subscription agreement from the McLaren Family LLLP, whose general partner is Alex C. McLaren, the father of the Company’s current President and CEO Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s preferred stock. The Company simultaneously accepted a subscription agreement from Gregory Johnston, a beneficial stockholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock.

Related party lease agreements

During 2014, we entered into three lease agreements with non-profit companies whose director, Alan Abrams, is a beneficial stockholder of the Company. For the year ended December 31, 2014, rental income associated with these three leases amounted to $110,527. Additionally, for the year ended December 31, 2014, in connection with a lease with a company owned by Alan Abrams, a beneficial stockholder of the Company, the Company recorded rental income of $30,000. For the nine months ended September 30, 2015, rental income associated with these three leases amounted to $299,329. Additionally, for the nine months ended September 30, 2015, in connection with a lease with a company owned by Alan Abrams, a beneficial stockholder of the Company, the Company recorded rental income of $150,000.

In August 2015, we entered into two lease agreements with a company owned by Alan Abrams, a beneficial stockholder of the Company, to lease space in Tempe, Arizona and Chino Valley, Arizona. The Tempe lease commenced on September 1, 2015 and expires on August 31, 2035 with base monthly rent $13,500, subject to a 5% annual increase. The Chino Valley lease commenced on August 1, 2015 and expires on July 31, 2035 with base monthly rent $30,000, subject to a 5% annual increase. For the nine months ended September 30, 2015 and 2014, rental income associated with these related party leases amounted to $176,040 and $0, respectively.

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At September 30, 2015 and December 31, 2014, deferred rent receivable – related party amounted to $220,649 and $28,027, respectively.

Rental property acquisition

On January 29, 2014, we entered into the Ultra Agreement with Ultra Health, pursuant to which we were to acquire a 1,536 square foot modular building to be delivered and erected on the purchased land for total cash payments of $675,000. Ultra Health is a related party due to common ownership and investments made with Alan Abrams, a beneficial stockholder of the Company. Subsequent to the purchase of this land and building, these real estate assets were transferred to Gilbert Property, LLC, a wholly-owned subsidiary of the Company. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, we became a party to a certain case brought in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (the “Defendants”), Case No. CV-2015-004225, wherein we alleged, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which we relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. We review our rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, we determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss - related party of $675,000. On July 9, 2015 and effective August 1, 2015, as discussed elsewhere herein, we entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases.

On April 4, 2014, we entered into a purchase agreement with Ultra Health pursuant to which we acquired a modular building in Green Valley, Arizona for total payment of $87,073. On October 22, 2014, our subsidiary, Green Valley Group LLC entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez, pursuant to which we acquired the property located in Green Valley, AZ for a purchase price of $400,000.

On May 28, 2014, we entered into a purchase agreement with Ultra Health pursuant to which we acquired three parcels of land and a building in Mohave County, Arizona for total payments of $260,000.

On August 12, 2014, we entered into a real estate purchase agreement with a company owned by Duke Rodriguez, who became a beneficial stockholder of the Company in July 2015, pursuant to which we acquired the property located in Bernalillo County, New Mexico consisting of 11.30 acres for total payments of $2,750,000. Pursuant to a settlement agreement as discussed above and elsewhere herein, we transferred title to this property to Defendants.

Agreement with CFO OnCall

Effective October 1, 2015 we entered into an agreement with CFO Oncall pursuant to which Adam Wasserman serves as our Chief Financial Officer. Under the agreement, CFO Oncall is to assist us with the timely preparation and assembly of our annual audit, and our quarterly and annual filings with the SEC, assisting with other public filings, summarizing adjusting entries relating to non-monetary transactions, assistance in communicating with our board of directors and attendance at board meetings, assistance with investor relations and assistance with staff training. For its services, we have agreed to pay CFO Oncall (a) a base cash fee of $4,500 per month, (b) an additional cash fee of $2,000 per month (which is deferred until the earlier of April 1, 2016 or our receipt of the proceeds of a capital raise, at which time the additional fee is increased to $6,500 per month and (c) $3,500 per month payable in shares of our common stock valued at the lesser of the share price from the most recent capital raise and 60% of the bid price for our common stock on the last day of the preceding fiscal quarter. Effective October 1, 2015 we issued 19,600 shares of common stock to CFO Oncall in satisfaction of required share issuances through December 31, 2015 (17,500 shares of which was issued as a bonus determined by the Company).

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for us by Legal & Compliance, LLC, West Palm Beach, FL.

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EXPERTS

The consolidated financial statements of Zoned Properties, Inc. as of December 31, 2014 and 2013, and for the years ended December 31, 2014 and 2013, included in this prospectus, have been included herein in reliance on the report by D. Brooks and Associates CPA’s, P.A., our independent public accounting firm, given on the authority that the firm are experts in accounting and auditing.

DISCLOSURE OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our directors and officers are indemnified as provided by the Nevada Statutes and our bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement, of which this prospectus is a part, on Form S-1 with the SEC relating to this offering. This prospectus does not contain all of the information in the registration statement and the exhibits and financial statements included with the registration statement. References in this prospectus to any of our contracts, agreements or other documents are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contracts, agreements or documents.

The Company’s filings with the SEC are available to the public on the SEC’s website at www.sec.gov. Those filings will also be available to the public on, or accessible through, our corporate website at www.zonedproperties.com. The information contained on or accessible through our corporate web site or any other web site that we may maintain is not part of this prospectus or the registration statement of which this prospectus is a part. You may also read and copy, at SEC prescribed rates, any document we file with the SEC, including the registration statement (and its exhibits) of which this prospectus is a part, at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington D.C. 20549. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. You may also request a copy of these filings, at no cost, by writing to us at Zoned Properties, Inc., 14300 N. Northsight Blvd., #208, Scottsdale, Arizona 85260, Attention: President, or telephoning us at (877) 360-8839.

Upon the effectiveness of the registration statement, we will be subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, will file with or furnish to the SEC periodic reports, proxy and information statements and other information. Such annual, quarterly and current reports; proxy and information statements; and other information can be inspected and copied at the locations set forth above. We will report our financial statements on a year ended December 31. We intend to furnish our stockholders with annual reports containing consolidated financial statements audited by our independent registered public accounting firm and will post on our website our quarterly reports containing unaudited consolidated financial statements for each of the first three quarters of each fiscal year.

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INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-6
Notes to Consolidated Financial Statements	F-7 - F-24
Condensed Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014	F-27
Condensed Consolidated Statements of Operations for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)	F-28
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2015 and 2014 (Unaudited)	F-29
Notes to Unaudited Condensed Consolidated Financial Statements	F-30 - F-42

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Zoned Properties, Inc

We have audited the accompanying consolidated balance sheets of Zoned Properties, Inc. as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. Zoned Properties, Inc.'s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Zoned Properties, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

D. Brooks and Associates CPA's, P.A.

West Palm Beach, Florida

October 1, 2015

D. Brooks and Associated C.PA’s, P.A. – 319 Clematis Street Suite 318, West Palm Beach FL 33401 - (954) 592-2507

F-2

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2014			2013
ASSETS
Cash	$	1,066,377		$	11,964
Rental properties, net		8,499,705			-
Note receivable		-			170,000
Deferred rent receivable - related party		28,027			-
Real estate tax escrow		39,122			-
Prepaid expenses and other current assets		175,313			101,076
Property and equipment, net		45,940			-
Security deposits		7,024			-
TOTAL ASSETS	$	9,861,508		$	283,040
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES:
Mortgage payable	$	2,100,000		$	-
Convertible note payable, net		500,000
Convertible note payable, net - related party		500,000			165,292
Convertible notes payable		-			85,000
Embedded conversion options		-			85,000
Embedded conversion options - related party		-			85,000
Accounts payable		27,835			-
Accrued expenses		57,837			14,234
Accrued expenses - related parties		47,959			-
Security deposits payable		18,100			-
Total Liabilities		3,251,731			434,526
Commitments (See Note 10)
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,000,000 and 700,000 shares issued and outstanding at December 31, 2014 and 2013, respectively ($1.00 per share liquidation preference)		2,000			700
Common stock: $.001 par value, 100,000,000 shares authorized; 18,676,304 and 156,969 issued and outstanding at December 31, 2014 and 2013, respectively		18,676			157
Additional paid-in capital		18,912,548			6,426,738
Subscription receivable		(4,000	)		-
Accumulated deficit		(12,319,447	)		(6,579,081	)
Total Stockholders' Equity (Deficit)		6,609,777			(151,486	)
Total Liabilities and Stockholders' Equity (Deficit)	$	9,861,508		$	283,040

See accompanying notes to consolidated financial statements.

F-3

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	December 31,
	2014			2013
REVENUES:
Rental revenues	$	327,387		$	-
Rental revenues - related parties		140,527			-
Total Revenues		467,914			-
OPERATING EXPENSES:
Compensation and benefits		3,918,440			274,161
Professional fees		932,510			173,186
General and administrative expenses		148,157			43,889
Depreciation and amortization		99,822			-
Property operating expenses		75,069			-
Real estate taxes		63,447			-
Consulting fees - related parties		35,417			80,000
Impairment loss on building - related party		675,000			-
Total Operating Expenses		5,947,862			571,236
LOSS FROM OPERATIONS		(5,479,948	)		(571,236	)
OTHER INCOME (EXPENSES):
Interest expenses		(143,789	)		(85,000	)
Interest expenses - related parties		(157,649	)		(135,769	)
Other income, net		41,020			-
Total Other Expenses, net		(260,418	)		(220,769	)
LOSS BEFORE INCOME TAXES		(5,740,366	)		(792,005	)
PROVISIONS OF INCOME TAXES		-			-
NET LOSS	$	(5,740,366	)	$	(792,005	)
NET LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.72	)	$	(14.40	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and Diluted		7,931,701			54,998

See accompanying notes to consolidated financial statements.

F-4

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

													Additional									Total Stockholders'
	Preferred Stock						Common Stock						Paid-in			Subscription			Accumulated			Equity
	# of Shares			Amount			# of Shares			Amount			Capital			Receivable			Deficit			(Deficit)
Balance, December 31, 2012	$	-		$	-			11,551		$	12		$	5,624,314		$	-		$	(5,787,076	)	$	(162,750	)
Common stock issued to former chief executive office for assumption of liability		-			-			125,000			125			149,875			-			-			150,000
Common stock issued for services and future services		-			-			20,418			20			336,480			-			-			336,500
Preferred stock issued for services and future services and control premium		700,000			700			-			-			187,663			-			-			188,363
Beneficial conversion feature on convertible debt		-			-			-			-			128,406			-			-			128,406
Net loss		-			-			-			-			-			-			(792,005	)		(792,005	)
Balance, December 31, 2013		700,000			700			156,969			157			6,426,738			-			(6,579,081	)		(151,486	)
Redemption of preferred shares		(700,000	)		(700	)		-			-			-			-			-			(700	)
Issuance of preferred shares for cash and control premium		2,000,000			2,000			-			-			3,365,000			-			-			3,367,000
Common stock issued for services		-			-			7,083			7			730,181			-			-			730,188
Sale of common stock for cash		-			-			18,535,897			18,536			7,859,834			(4,000	)		-			7,874,370
Common stock issued upon conversion of convertible debt and related interest		-			-			24,382			24			396,859			-			-			396,883
Common stock issued for land acquisition		-			-			139			-			16,667			-			-			16,667
Common shares previously issued for services cancelled		-			-			(24,500	)		(24	)		(52,755	)		-			-			(52,779	)
Cancellation of common shares previously issued for convertible debt		-			-			(23,666	)		(24	)		24			-			-			-
Reclassification of embedded conversion option		-			-			-			-			170,000			-			-			170,000
Net loss		-			-			-			-			-			-			(5,740,366	)		(5,740,366	)
Balance, December 31, 2014		2,000,000		$	2,000			18,676,304		$	18,676		$	18,912,548		$	(4,000	)	$	(12,319,447	)	$	6,609,777

See accompanying notes to consolidated financial statements.

F-5

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended
	December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,740,366	)	$	(792,005	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		99,821			-
Stock-based compensation		4,100,344			423,787
Deferred rent receivable - related parties		(28,027	)		-
Amortization of debt discount		142,564			219,285
Impairment loss on building - related party		675,000			-
Gain on sale of note receivable		(41,020	)		-
Change in operating assets and liabilities:
Real estate tax escrow		(39,122	)		-
Prepaid expenses and other assets		(132,171	)		-
Security deposits		(7,024	)		-
Accounts payable		27,835			-
Accrued expenses		43,603			1,484
Accrued expenses - related parties		51,984			-
Security deposits payable		18,100			-
NET CASH USED IN OPERATING ACTIVITIES		(828,479	)		(147,449	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note receivable		211,020			-
Acquisition of land		(3,193,000	)		-
Acquisition of buildings and improvements		(6,062,980	)		-
Acquisition of property and equipment		(47,819	)		-
NET CASH USED IN INVESTING ACTIVITIES		(9,092,779	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		7,874,371			-
Proceeds from sale of preferred stock		2,000			-
Redemption of preferred stock		(700	)		-
Proceeds from convertible note payable		500,000			-
Proceeds from convertible note payable - related party		500,000			159,413
Proceeds from related party loan		200,387			-
Repayment of related party loan		(200,387	)		-
Proceeds from mortgage payable		2,100,000			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		10,975,671			159,413
NET INCREASE IN CASH		1,054,413			11,964
CASH, beginning of year		11,964			-
CASH, end of year	$	1,066,377		$	11,964
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest
Interest	$	142,914		$	-
Income taxes	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for land	$	16,667		$	-
Issuance of common stock for convertible debt and interest	$	396,883		$	-
Reclassification of embedded conversion option on convertible debt to paid-in capital upon conversion	$	170,000		$	-
Issuance of common stock for future services	$	240,000		$	109,500
Common stock issued for assumption of liability	$	-		$	150,000
Increase in note receivable for convertible debt	$	-		$	170,000

See accompanying notes to consolidated financial statements.

F-6

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

Organization

Zoned Properties, Inc., formerly Vanguard Minerals Corp. (the “Company”) was incorporated in the State of Nevada on August 25, 2003. On May 2, 2006, the Company changed its name to Knewtrino, Inc. On August 10, 2007, the Company changed its name to Vanguard Minerals Corporation. On October 2, 2013, the Company changed its name to Zoned Properties Inc. to reflect its maturing business model that focuses on commercial property acquisition and development.

In September 2013, the Company issued the former CEO of the Company, 125,000 shares of common stock of the Company, representing approximately 91.54% of the issued and outstanding voting power of the Company, in exchange for his assumption of liabilities of the Company amounting to $150,000. The transaction resulted in a change in control of the Company.

Concurrently with the change in control of the Company, the Company became a strategic real estate investment firm whose primary focus is acquiring commercial properties that face unique zoning challenges. The Company acquires properties that have the potential to increase value within their surrounding communities. The Company’s goal is to manage a portfolio of properties that it will own and lease, and to provide oversight on each managed property.

During 2014, the Company incorporated the following wholly-owned limited liability companies:

● Gilbert Property Management, LLC was organized in the State of Arizona on February 10, 2014.

● Tempe Industrial Properties, LLC was organized in the State of Arizona on February 19, 2014.

● Chino Valley Properties, LLC was organized in the State of Arizona on April 15, 2014.

● Kingman Property Group, LLC was organized in the State of Arizona on April 15, 2014.

● Green Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

On May 12, 2014, a 1–for-120 reverse stock split was declared effective for stockholders of record on May 12, 2014. All share and per share amounts have been retroactively restated in the accompanying consolidated financial statements and related notes to reflect this stock split.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the years ended December 31, 2014 and 2013 include the useful life of rental properties, property and equipment, assumptions used in assessing impairment of long-term assets, valuation allowances for deferred tax assets, and the fair value of non-cash equity transactions.

F-7

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Fair value of financial instruments and fair value measurements

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, note receivable, deferred rent receivable, prepaid expenses and other current assets, real estate tax escrow, short-term notes payable, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments.

The Company analyzes all financial instruments with features of both liabilities and equity under the FASB’s accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with ASC Topic 820.

ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Risks and Uncertainties

The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company conducts a significant portion of its business in Arizona. Consequently, any significant economic downturn in the Arizona market could potentially have an effect on the Company’s business, results of operations and financial condition.

Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. The majority of the Company’s cash and cash equivalents are held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. The Company had no cash equivalents at December 31, 2014 or 2013, respectively. At December 31, 2014, the Company had approximately $750,000 of cash in excess of FDIC limits.

Accounts receivable

The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expense.

Real Estate Tax Escrow

Real estate tax escrow consists of funds held for the purpose of real estate taxes owed. These funds will be released as required to satisfy tax payments as due.

F-8

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Rental Properties

Rental properties are carried at cost less accumulated depreciation and amortization. Betterments, major renovations and certain costs directly related to the improvement of rental properties are capitalized. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 7 to 39 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments. The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions. The Company records acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value. The Company amortizes acquired above-and below-market leases as a decrease or increase to rental income, respectively, over the lives of the respective leases. Amortization of acquired in-place leases is included as a component of depreciation and amortization. For the year ended December 31, 2014 and 2013, there was no amortization of acquired in-place leases.

The Company’s properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If the Company’s estimates of the projected future cash flows, anticipated holding periods, or market conditions change, the Company’s evaluation of impairment losses may be different and such differences could be material to its consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. For the year ended December 31, 2014, the Company recorded an impairment loss of $675,000 related to the purchase of a modular building from a company owned by a shareholder who became a beneficial stockholder in July 2014 (see Note 3).

The Company has capitalized land, which is not subject to depreciation.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives. The Company uses a five year life for office equipment, seven years for furniture and fixtures, and 5 to 10 years for vehicles. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Debt Discount

The Company records debt discounts in connection with raising funds through the issuance of debt. These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

F-9

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount. When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument (offset to additional paid in capital) and amortized to interest expense over the life of the debt.

Revenue Recognition

Rental income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of rent steps and rent abatements under the leases. We commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. Rental income also includes the amortization of acquired above-and below-market leases, net. Beginning in 2014, the Company began generating revenues from the non-residential rental properties.

Certain of the Company’s leases currently contain rental increases at specified intervals. The Company records as an asset, and include in revenue, rents receivable that will be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Deferred rents receivable in the accompanying balance sheets includes the cumulative difference between rental revenue recorded on a straight-line basis and rents received from the tenants in accordance with the lease terms. Accordingly, management determines to what extent the deferred rent receivable applicable to each specific tenant is collectible. The Company reviews material rents receivable and takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of rent receivable with respect to any given tenant is in doubt, we record an increase in the allowance for uncollectible accounts, the Company records a direct write-off of the specific rent receivable. No such reserves related to deferred rent receivable have been recorded as of December 31, 2014 or 2013. For the year ended December 31, 2014, in connection with certain related party leases, the Company only included in revenues the amount of rents received from the related parties in accordance with the lease terms since on August 1, 2015, the Company transferred title to its Bernalillo, New Mexico and the respective related party lease as part of a settlement agreement (See Note 12), and cancelled a related party lease in June 2015.

Basic Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

	December 31, 2014		December 31, 2013
Convertible debt		200,000		3,464,204

Segment Reporting

The Company’s business is comprised of one reportable segment. The Company has determined that its properties have similar economic characteristics to be aggregated into one reportable segment (operating, leasing and managing commercial properties). The Company’s determination was based primarily on its method of internal reporting.

Income Tax

Deferred income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

F-10

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Income Tax (continued)

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not" threshold. As of December 31, 2014 and 2013, the Company does not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying consolidated financial statements.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures. ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation. ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting. ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015. The Company is currently evaluating the impact of the adoption of ASU 2014-12 on its consolidated financial statements.

In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, that will require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management will assess if there is substantial doubt about an entity’s ability to continue as a going concern within one year after the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. The new standard defines substantial doubt and provides example indicators. Disclosures will be required if conditions give rise to substantial doubt. However, management will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. This standard is effective for public entities for annual periods ending after December 15, 2016. Earlier application of this standard is permitted. This standard is not expected to have a material effect on our financial position, results of operations and cash flows.

F-11

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Recently Issued Accounting Pronouncements (continued)

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

NOTE 3 – RENTAL PROPERTIES

On January 22, 2014, the Company entered into a real estate purchase agreement with a stockholder, pursuant to which the Company acquired land located in Gilbert, Arizona for $266,667, of which $250,000 was paid in cash, and $16,667 was paid by issuing 139 shares of common stock of the Company at an agreed price of $120 per share based on recent sales of the Company’s common stock in a private placement.

On January 29, 2014, the Company entered into a purchase and consulting agreement (the “Ultra Agreement”) with Ultra Health, LLC, a related party due to common ownership and investments made by beneficial stockholders of the Company (“Ultra Health”), pursuant to which the Company was to acquire a 1,536 square foot modular building to be delivered and erected on the purchased land for total cash payments of $675,000. Subsequent to the purchase of this land and building, these real estate assets were transferred to Gilbert Property, LLC, a wholly-owned subsidiary of the Company. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. The Company reviews it rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, the Company determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss - related party of $675,000. On August 1, 2015, the Company settled this lawsuit (see Note 12).

On March 7, 2014, the Company entered into a real estate purchase agreement with Maryland LLC, an Arizona limited liability company, pursuant to which the Company acquired land and a building located in Tempe, Arizona, for total payment of $4,600,000, of which $2,500,000 was paid by cash, and a $2,100,000 promissory note from Maryland LLC. The transaction was completed and the title of the land was transferred to the Company (See Note 7). Subsequent to the purchase, the Company spent $206,370 on building improvements and equipment.

On April 4, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired a modular building in Green Valley, Arizona for total payment of $87,073. On October 22, 2014, Green Valley entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez who became a beneficial stockholder of the Company in July 2014 (“Duke Rodriguez”), pursuant to which the Company acquired the property located in Green Valley, AZ for a purchase price of $400,000.

On May 28, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired three parcels of land and a building in Mohave County, Arizona for total payments of $260,000. Subsequent to the purchase, the Company spent $27,538 in improvements.

On August 12, 2014, the Company entered into a real estate purchase agreement with a company owned by Duke Rodriguez, pursuant to which the Company acquired the property located in Bernalillo County, New Mexico consisting of 11.30 acres for total payments of $2,750,000. Pursuant to a settlement agreement (see Note 12), the Company will transfer title to this property to Defendants.

F-12

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

At December 31, 2014 and 2013, rental properties, net consisted of the following:

Description	Useful Life (Years)	2014			2013
Building and building improvements	39	$	5,364,815		$	-
Land	-		3,209,668			-
Equipment	7		23,164			-
Rental properties, at cost			8,597,647			-
Less: accumulated depreciation			(97,942	)		-
Rental properties, net		$	8,499,705		$	-

For the years ended December 31, 2014 and 2013, depreciation and amortization of rental properties amounted to $97,942 and $0, respectively.

NOTE 4 - PROPERTY AND EQUIPMENT

At December 31, 2014 and 2013, property and equipment consisted of the following:

Description	Useful Life (Years)	2014			2013
Vehicle and site trailers	5 – 10	$	42,555		$	-
Office furniture and equipment	5 – 7		5,264			-
			47,819			-
Less: accumulated depreciation			(1,879	)		-
Property and equipment, net		$	45,940		$	-

For the years ended December 31, 2014 and 2013, depreciation expense amounted to $1,879 and $0, respectively.

NOTE 5 – RELATED PARTY TRANSACTIONS

(A) Note receivable- related party

On December 9, 2013, the Company entered into a Note Purchase and Loan Participation Assignment Agreement (the “Note Purchase Agreement”) with and amongst MAC CAM LLC, a limited liability company (“MAC CAM”), partially owned by the Company’s former President, a third party entity, and five individuals two of which are considered related parties, pursuant to which the Company issued two convertible promissory notes ($85,000 to MAC CAM and $85,000 to a stockholder) aggregating $170,000 to purchase a Promissory Note dated February 19, 2013, in the original principal amount of $209,400 and with a maturity date of February 1, 2018, which is secured by a Mortgage/Deed of Trust on Real Property recorded March 5, 2013 in Document No. 2013-01174, of the Official Records of the County Recorder of Graham County, Arizona. On March 12, 2014, the Company sold this note for a cash payment of $210,500. For the year ended December 31, 2014, the Company reported a gain of $41,020 which is reflected as other income on the accompanying consolidated statements of operations.

(B) Convertible notes payable – related parties

From September 2013 to December 2013, the Company borrowed funds from MAC CAM, in the aggregate amount of $159,413 to cover its daily operations, including but not limited to, consulting and advisory fees, accounting fees, legal fees, compliance fees and others general and administrative expenses. The borrowings were evidenced by four convertible promissory notes, dated on September 30, 2013 (“September Note”), October 31, 2013 (“October Note”), November 30, 2013 (“November Note”) and December 31, 2013 (“December Note”).

F-13

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(B) Convertible notes payable – related parties (continued)

The September Note and October Note accrued annual interest at 8% per annum and the November Note and December Note accrued interest at 10% per annum. In connection with the September Note and October Note, the holder of the Notes has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors at fixed conversion prices of $6.00 and $6.00 per common share, respectively. In connection with the November Note and December Note, the holder of the Notes has an option to convert all or any portion of unpaid principal balance of the Notes into the common stock of the Company or its successors at fixed conversion prices of $6.00 and $12.00 per common share, respectively. The Company evaluated whether or not these convertible notes contained embedded conversion options, which meet the definition of a derivatives under ASC Topic 815. The Company concluded that since the convertible notes had fixed conversion prices, the convertible notes were not derivative instruments. The Company analyzed this provision under ASC Topic 815 and therefore it qualified as equity under ASC Topic 815. The convertible notes were considered to have embedded beneficial conversion features (BCF) because the effective conversion price was less than the fair value of the Company’s common stock on the respective note dates. The convertible notes were fully convertible at the issuance date. Accordingly, the intrinsic value of the beneficial conversion features were calculated to be $128,406 and was recorded as a debt discount and was amortized over the respective note term. For the years ended December 31, 2014 and 2013, amortization of debt discount related to these convertible notes amounted to $79,121 and $49,285, respectively, and has been included in interest expense – related party on the accompanying consolidated statements of operations. On March 5, 2014, the Company issued a total of 22,942 shares of common stock of the Company to settle all principal and interest obligations pursuant to these convertible notes payable (see Note 8 (I)).

On December 9, 2013, in connection with the Note Purchase Agreement, the Company issued a convertible promissory note in the amount of $85,000 to MAC CAM. The note bears an interest rate of 10% per annum and was due on December 9, 2014, pursuant to which the holders of the Notes have an option to convert all or any portion of the accrued interest and unpaid principal balance of the Notes into the common stock of the Company or its successors, at 50% of the market bid price of the common stock on the demand date for conversion. Pursuant to ASC Topic 470-20-525 (Debt with conversion and other options), since this convertible note had fixed conversion percentages of 50% of the stock price, the Company determined it had a fixed monetary amount that can be settled for the debt. Accordingly, at December 31, 2013, the Company recorded an embedded conversion option liability amounting to $85,000 on the accompanying consolidated balance sheet since this convertible note is convertible for the conversion premium and recorded interest expense – related party of $85,000. At December 31, 2013, principal amount due under this convertible note amounted to $85,000. On January 29, 2014, MAC CAM fully converted this note and all unpaid interest into 720 shares of the Company’s common stock (see Note 8(I). Accordingly, on the date of conversion, the embedded conversion option liability of $85,000 was reclassified to additional paid-in capital.

On August 20, 2014, the Company received $500,000 from a beneficial common stockholder who also holds 50% of the issued preferred stock pursuant to the terms of a Senior Convertible Debenture. The Debenture bears interest at 7% and the principal balance and all accrued interest is due on the maturity date of August 20, 2017. The holder has the option after 12 months to convert all or a portion of the Debenture into shares of the Company’s common stock at the conversion price of $5.00 per share. As of December 31, 2014, the principal balance due and owing under this Debenture is $500,000. As of December 31, 2014, accrued interest payable amounted to $12,542 and is included in accrued expenses – related parties on the accompanying consolidated balance sheet.

At December 31, 2014 and 2013, aggregate convertible notes payable – related parties consisted of the following:

	December 31, 2014		December 31, 2013
Convertible notes payable – related parties	$	500,000	$	244,413
Less: debt discount		-		(79,121	)
Total		500,000		165,292
Less: current portion of convertible notes payable–related parties		-		(165,292	)
Convertible notes payable – related parties – long-term	$	500,000	$	-

(C) Note payable - related party

On January 31, 2014, the Company received $200,387 from a beneficial stockholder of the Company. Pursuant to the terms of the loan, the loan bears interest at 10% and was due on February 14, 2014. On February 11, 2014, the balance due was repaid in full.

(D) Preferred stock

On December 20, 2013, the Board of Directors of the Company approved the issuance of 700,000 shares of preferred stock to MAC CAM (See Note 8).

F-14

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(D) Preferred stock (continued)

On July 22, 2014, the Board of Directors of the Company accepted a subscription agreement from the McLaren Family LLLP (“MFT”), whose general partner is Alex C. McLaren, a Director and the father of the Company’s current President and CEO, Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. In addition to a beneficial ownership of common stock, MFT holds 50% of the current Preferred Stock that controls the Company.

On July 22, 2014, the Company accepted a subscription agreement from Gregory Johnston, a beneficial shareholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock for cash of $1,000 (See Note 8). In addition to a beneficial ownership of common stock, Mr. Johnston holds 50% of the current Preferred Stock that controls the Company.

In connection with the issuance of super voting control preferred stock on December 20, 2013 and July 22, 2014 (herein referred to as the “Valuation Dates”, the Company assessed the fair value of the issued preferred stock issued to a MAC CAM, Gregory Johnston and McLaren Family LLLP for purposes of determining the valuation as set forth in ASC 820–10–35–37 Fair Value in Financial Instruments. The Company utilized the market approach, on the valuation dates, and for the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation of $3,365,000 and $188,363, respectively (See Note 8).

(E) Employment agreement

On July 31. 2014, the Company entered into a 10 year employment agreement with a beneficial stockholder of the Company, for annual compensation of $85,000. The Company may also grant this employee/beneficial stockholder stock options of up to 20,000 shares per year for completed service and may receive a bonus at the discretion of the Company’s board of directors. Additionally, as part of the employment agreement, the Company entered into a gold parachute agreement with this employee/beneficial stockholder which expires on December 31, 2039, unless terminated earlier as defined in the agreement, whereby, no benefits under this agreement shall be payable unless there is a change in control of the Company. At December 31, 2014, amounts due to this employee/beneficial stockholder under this agreement amounted to $35,417, which has been included in accrued expenses – related parties on the accompanying consolidated balance sheet. In addition to other terms in the agreement, upon a change in control of the Company as defined in the agreement, if employment by the Company shall be terminated (a) by the Corporation other than for cause, retirement or disability or (b) by this employee for good reason, then he shall be entitled to the benefits provided below:

(a). The Company shall pay this employee/beneficial stockholder his full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts and benefits to which he is entitled under any compensation plan of the Company, at the time such payments are due, except as otherwise provided, and

(b). In lieu of any further salary payments to the employee/beneficial stockholder for periods subsequent to the Date of Termination, the Company shall pay as severance pay to him a lump sum severance payment (the "Severance Payment”) equal to five times the sum of his annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the Notice of Termination.

(F) Related party lease agreements

During 2014, the Company entered into three lease agreements with non-profit companies whose director is a beneficial stockholder of the Company. For the year ended December 31, 2014, rental income associated with these three leases amounted to $110,527. At December 31, 2014, deferred rent receivable – related party amounted to $28,027. Additionally, for the year ended December 31, 2014, in connection with a lease with a company owned by a beneficial stockholder of the Company, the Company recorded rental income of $30,000.

(G) Rental property acquisition

On January 29, 2014, the Company entered into the Ultra Agreement with Ultra Health, pursuant to which the Company was to acquire a 1,536 square foot modular building to be delivered and erected on the purchased land for total cash payments of $675,000. Subsequent to the purchase of this land and building, these real estate assets were transferred to Gilbert Property, LLC, a wholly-owned subsidiary of the Company. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. The Company reviews it rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, the Company determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss - related party of $675,000. On August 1, 2015, the Company settled this lawsuit (see Note 12).

F-15

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(G) Rental property acquisition (continued)

On April 4, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired a modular building in Green Valley, Arizona for total payment of $87,073.

On May 28, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired three parcels of land and a building in Mohave County, Arizona for total payments of $260,000.

On August 12, 2014, the Company entered into a real estate purchase agreement with a company owned by Duke Rodriguez, pursuant to which the Company acquired the property located in Bernalillo County, New Mexico consisting of 11.30 acres for total payments of $2,750,000.

On October 22, 2014, Green Valley entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez, pursuant to which the Company acquired the property located in Green Valley, AZ for a purchase price of $400,000.

(H) Common stock issued for cash

In July 2014, the Company sold 8,750,000 shares of common stock to beneficial shareholders at a price of $0.01 per share for proceeds of $87,500. Additionally, in August 2014, the Company sold 1,000,000 shares of common stock to a beneficial shareholder at a price of $1.00 per share for proceeds of $1,000,000. (See Note 8(F).

(I) Common stock issued to chief executive officer for assumption of liability/change of control

On September 1, 2013, the Company issued 125,000 shares of common stock at $1.20 per share to Marc Brannigan, the Company’s former chief executive officer for the assumption of a liability of $150,000. At September 1, 2013, the 125,000 shares of common stock represented approximately 91.54% of the issued and outstanding voting power of the Company. The transaction resulted in a change in control of the Company. On April 14, 2014, the former chief executive officer of the Company returned 21,583 of such of common shares to the Company. The shares were cancelled and accounted for at par value of $0.001 per share.

(J) Common stock issued for services

On December 9, 2013, the Board of Directors of the Company approved the issuance of a total of 8,334 shares of common stock to 3 members of MAC CAM, a related party, (5,000 shares) and two individuals (3,334 shares) in connection with the purchase of a note receivable (see Note 5(A)). The fair value of this stock issuance was determined using the trading price of the Company’s common stock on the grant date and amounted to $200,000 or $24 per common share.

On February 10, 2014, the Company issued 2,083 shares of common stock to the chief executive officer of the Company for services rendered. The shares were valued at their fair value of $250,000 using the recent sale price of the common stock on the dates of grant of $120 per common share. In July 2014, the 2,083 shares were returned to the Company and the shares were cancelled and accounted for at par value of $0.001 per share. In connection with these shares, for the year ended December 31, 2014, the Company recorded stock-based compensation expense of $250,000.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

On December 9, 2013, in connection with the Note Purchase Agreement, the Company issued a convertible promissory note in the amount of $85,000 to a stockholder of the Company. The Note bear an interest rate of 10% per annum and was due on December 9, 2014, pursuant to which the holder of the Note has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Note into the common stock of the Company or its successors, at 50% of the market bid price of the common stock on the demand date for conversion. Pursuant to ASC Topic 470-20-525 (Debt with conversion and other options), since this convertible note had fixed conversion percentages of 50% of the stock price, the Company determined it had a fixed monetary amounts that can be settled for the debt. Accordingly, at December 31, 2013, the Company recorded an embedded conversion liability amounting to $85,000 on the accompanying consolidated balance sheet since this convertible note is convertible for the conversion premium and recorded interest expense of $85,000.

F-16

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

At December 31, 2013, principal amount due under this convertible note amounted to $85,000. On January 29, 2014, the shareholder fully converted this note and all unpaid interest into 720 shares of the Company’s common stock (See Note 8(I). Accordingly, on the date of conversion, the embedded conversion option liability of $85,000 was reclassified to additional paid-in capital.

On August 20, 2014, the Company received $500,000 from a stockholder pursuant to the terms of a Senior Convertible Debenture. The Debenture bears interest at 7% and is payable monthly and the principal balance and any remaining unpaid interest is due on the maturity date of August 20, 2017. The holder has the option after 12 months to convert all or a portion of the Debenture into shares of the Company’s common stock at the conversion price of $5.00 per share. As of December 31, 2014, the principal balance due and owing under this Debenture is $500,000.

At December 31, 2014 and 2013, aggregate convertible notes payable consisted of the following:

	December 31, 2014		December 31, 2013
Convertible notes payable	$	500,000	$	85,000
Less: current portion of convertible notes payable		-		(85,000	)
Convertible notes payable – Long-term	$	500,000	$	-

NOTE 7 – MORTGAGE PAYABLE

On March 7, 2014 the Company executed a $2,100,000 mortgage payable to acquire real estate having a carrying value of $4,600,000. The mortgage bears interest at 7.5%. Monthly interest only payments begin April 7, 2014 and continue each month thereafter until paid. The entire unpaid balance and accrued interest is due on March 7, 2019, the maturity date of the mortgage and is secured by the underlying property. The mortgage terms do not allow participations by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project.

NOTE 8 – STOCKHOLDERS’ EQUITY

(A) Preferred Stock

On December 13, 2013, the Board of Directors of the Company authorized and approved to create a new class of Preferred Stock consisting of 5,000,000 shares authorized, $.001 par value. The preferred stock is not convertible into any other class or series of stock. The holders of the preferred stock are entitled to fifty (50) votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding. Upon liquidation, the holders of the shares will be entitled to receive $1.00 per share plus redemption provision before assets distributed to other shareholders. The holders of the shares are entitled to dividends equal to common share dividends.

Once any shares of Preferred Stock are outstanding, at least 51% of the total number of shares of Preferred Stock outstanding must approve the following transactions:

a.	Alter or change the rights, preferences or privileges of the Preferred Stock.
b.	Create any new class of stock having preferences over the Preferred Stock.
c.	Repurchase any of our common stock.
d.	Merge or consolidate with any other company, except our wholly-owned subsidiaries.
e.	Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, or charge or encumbrance or security interest in or pledge of, or sell and leaseback, in all or substantially all of our property or business.
f.	Incur, assume or guarantee any indebtedness maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by us, except for operating leases and obligations assumed as part of the purchase price of property.

F-17

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(A) Preferred Stock (continued)

On December 20, 2013, the Board of Directors of the Company approved the issuance of 700,000 shares of preferred stock to MAC CAM for professional services in connection with setting up the business with respect to commercial properties acquisition and management, and running the daily operations of the Company. On July 22, 2014, these 700,000 shares were redeemed by the Company under an agreement with MAC CAM at a cost of $700.

On July 22, 2014, the Board of Directors accepted a subscription agreement from the McLaren Family LLLP, whose general partner is Alex C. McLaren, a Director and the father of the Company’s current President and CEO Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. The Company simultaneously accepted a subscription agreement from a beneficial common stockholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock for cash of $1,000.

In connection with the issuance of super voting control preferred stock on December 20, 2013 and July 22, 2014 (herein referred to as the “Valuation Dates”, the Company assessed the fair value of the issued preferred stock issued to a MAC CAM, Gregory Johnston and McLaren Family LLLP for purposes of determining the valuation as set forth in ASC 820–10–35–37 Fair Value in Financial Instruments. Based on an independent appraisal report which utilized the market approach, on the valuation dates, for the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation of $3,365,000 and $188,363, respectively. The preferred stock issued was valued based upon industry specific control premiums and the Company’s market cap at the time of the transaction. The market approach was utilized to arrive at an indication of equity value based on recent transactions involving the Company’s common stock. The control premium for the Company was based on publicly traded companies or comparable entities which have been recently acquired in arm’s–length transactions. The Company estimated the control premium for the voting control of the preferred stock at 17.5% as of July 22, 2014 and 18.48% at December 20, 2013, based on comparable publicly traded data, adjusted for company-specific factors.

(B) Stock Split

On May 12, 2014, a one–for-120 reverse stock split was declared effective for stockholders of record on May 12, 2014. All share and per share amounts have been retroactively restated in the accompanying consolidated financial statements and related notes to reflect this stock split.

(C) Amendment to Articles of Incorporation

On May 21, 2014, the Company amended its Articles of Incorporation to provide for an increase in its authorized share capital. The authorized capital stock increased to 100,000,000 common shares at a par value of $0.001 per share.

(D) Equity Incentive Plan

On October 1, 2014 the Board of Directors authorized an Equity Incentive Plan, which reserved 10,000,000 shares of common stock. The Plans purpose is to enable the Company to offer its employees, officers, directors and consultants an opportunity to acquire a proprietary interest in the Company for their contributions. As of December 31, 2014, no equity instruments have been issued pursuant to the Plan.

(E) Common stock issued to chief executive officer for assumption of liability/change of control

On September 1, 2013, the Company issued 125,000 shares of common stock at $1.20 per share to Marc Brannigan, the Company’s former chief executive officer for the assumption of a liability of $150,000. At September 1, 2013, the 125,000 shares of common stock represented approximately 91.54% of the issued and outstanding voting power of the Company. The transaction resulted in a change in control of the Company. On April 14, 2014, the former chief executive officer of the Company returned 21,583 of such of common shares to the Company. The shares were cancelled and accounted for at par value of $0.001 per share.

F-18

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(F) Common stock issued for cash

During the quarter ended March 31, 2014, the Company issued 48,980 shares of restricted common stock at a price of $120 per share to approximately 28 accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended. In July 2014, the Company cancelled 83 shares and returned proceeds of $10,000 to an investor. The total proceeds the Company received from this private placement were approximately $5,858,000 and a subscription receivable of $4,000.

In July 2014, the Company issued 16,637,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended, at a price of $0.01 per share for proceeds of $166,370.

From August 2014 to December 2014, the Company issued 1,850,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended at a price of $1.00 per share for proceeds of $1,850,000.

(G) Common stock issued for rental property

On January 22, 2014, the Company entered into a real estate purchase agreement with a stockholder pursuant to which the Company acquired land located in Gilbert, Arizona for $266,667, of which $250,000 was paid in cash and $16,667 was paid by issuing 139 shares of the common stock of the Company valued at $120 per common share based on recent sales of the Company’s common stock.

(H) Common stock issued for services

2013

On November 11, 2013, the Company entered into a consulting service agreement with a consultant for construction advice, business model development, product planning and introduction of prospective customers, in exchange for the issuance of 4,167 shares of common stock of the Company. Additionally, on November 11, 2013, the Company entered into a consulting service agreement with a consultant for advice on equity and debt financing, sales assistance, capitalization planning and ESOP structure, in exchange for the issuance of 6,250 shares of common stock of the Company. The agreements had a term of two years effective from November 11, 2013 ending November 10, 2015. The fair value of these shares issuance were determined using the trading price of the Company’s common stock on the grant date and amounted to $100,000 or $9.60 per common share. Accordingly, the Company recorded prepaid expenses of $100,000 which will be amortized into consulting expense over term of the agreements.

On December 1, 2013, the Company entered into a six month consulting service agreement with a consultant for public relations services in exchange for the issuance of 417 shares of common stock of the Company. The fair value of this stock issuance was determined using the trading price of the Company’s common stock on the grant date and amounted to $9,500 or $22.80 per common share. Accordingly, the Company recorded prepaid expenses of $9,500 which will be amortized into consulting expense over term of the agreements.

On December 9, 2013, the Board of Directors of the Company approved the issuance of a total of 8,334 shares of common stock to 3 members of MAC CAM, a related party, (5,000 shares) and two individuals (3,334 shares) in connection with the purchase of a note receivable (see Note 5(A)). The fair value of this stock issuance was determined using the trading price of the Company’s common stock on the grant date and amounted to $200,000 or $24 per common share.

On December 17, 2013, the Company issued 1,250 shares of common stock to a consultant for professional services in connection with reporting compliance and corporate matters during 2013. The value of these common shares was determined using the trading price of the Company’s common stock on the grant date and amounted to $27,000 or $21.60 per common share.

F-19

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

(H) Common stock issued for services (continued)

In connection with the above 2013 issuances, for the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation/consulting expense of $57,935 and $235,424, respectively. Additionally, at December 31, 2014 and 2013, prepaid expenses amounted to $43,141 and $101,076, respectively, on the accompanying consolidated balance sheets.

2014

On January 8, 2014, the Company entered into a consulting service agreement with a consultant for services related to compliance filings in exchange for the issuance of 83 shares of common stock of the Company. The shares were valued at their fair value of $10,000 using the recent sale price of the common stock on the dates of grant of $120 per common share and the Company recorded stock-based consulting fees of $10,000. 

2014 (continued)

On January 22, 2014, the Company issued 833 shares of common stock and paid $20,000 in cash to Cumbre Investment LLC, a company controlled by a stockholder, to acquire Right of First Refusal on certain properties and the right to a 30% share of the proceeds of the future sale of such property. The shares were valued at their fair value of $100,000 using the recent sale price of the common stock on the dates of grant of $120 per common share and accordingly, the Company recorded assignment fees of $100,000 which has been included in professional fees in the accompanying consolidated statement of operations.

On January 28, 2014, the Company entered into two consulting service agreements with two consultant/stockholders for business development services in exchange for the aggregate issuance of 834 shares of common stock of the Company. The shares were valued at their fair value of $100,000 using the recent sale price of the common stock on the dates of grant of $120 per common share. Accordingly, the Company recorded prepaid expenses of $100,000 which will be amortized into consulting expense over term of the agreements. In July 2014, the 834 shares were returned to the Company and cancelled. In connection with these shares, the Company recorded stock-based consulting fees of $47,221 and on the date of cancellation, the Company reclassified the remaining unamortized prepaid expense of $52,779 to additional paid–in capital.

On January 29, 2014, in connection with the Ultra Agreement (see Note 3) with Ultra Health, the Company issued 1,167 shares of common stock of the Company as a consulting fee to Ultra for their assistance in helping the Company pursue a certificate of occupancy and authorization to operate under the AZ Medical Marijuana Act. On November 12, 2014 the Company declared Ultra Health, Inc. to be in default under the terms of the Agreement for failure to timely deliver a certificate of occupancy and authorization to operate under the AZ Medical Marijuana Act, as was required. The shares were valued at their fair value of $140,000 using the recent sale price of the common stock on the dates of grant of $120 per common share. Accordingly, for the year ended December 31, 2014, the Company recorded stock-based consulting expense of $140,000.

On February 10, 2014, the Company issued 2,083 shares of common stock to the chief executive officer of the Company for services rendered. The shares were valued at their fair value of $250,000 using the recent sale price of the common stock on the dates of grant of $120 per common share. In July 2014, the 2,083 shares were returned to the Company and the shares were cancelled and accounted for at par value of $0.001 per share. In connection with these shares, for the year ended December 31, 2014, the Company recorded stock-based compensation expense of $250,000.

On May 27, 2014, the Company issued 2,083 shares of common stock to a consultant for services rendered. The shares were valued at their fair value of $130,188 using the recent sale price of the common stock on the dates of grant of $120 per common share and accordingly, the Company recorded stock-based consulting fees of $130,188.

(I) Common stock issued for convertible debt – related parties and other

During the first quarter of 2014, the Company issued a total of 24,382 shares of common stock of the Company to settle the principal obligations of certain convertible notes payable – related parties aggregating $244,413 (See Note 5(B)), convertible notes of $85,000 (See Note 6), and all related accrued interest payable in amount of $4,027. In connection with these shares, for the year ended December 31, 2014, the Company reduced principal amounts due under these convertible notes by $329,413, reduced accrued interest expense by $4,027, and recorded interest expense – related parties of $63,443 which represents an interest charge related the calculation of a beneficial conversion feature upon the conversion of accrued interest payable at a discount to the fair market value of the Company’s common stock on the date of conversion. In July 2014, 23,666 of these shares were returned to the Company and the shares were cancelled and accounted for at par value of $0.001 per share.

F-20

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

NOTE 9 – INCOME TAXES

The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets at December 31, 2014 and 2013 consist of net operating loss carryforwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2014 and 2013 were as follows:

	Years Ended December 31,
	2014			2013
Income tax expense (benefit) at U.S. statutory rate of 34%	$	(1,926,593	)	$	(205,476	)
Income tax benefit - state		(368,319	)		(39,282	)
Non-deductible expenses		1,718,378			184,440
Change in valuation allowance		576,534			60,318
Total provision for income tax	$	-		$	-

The Company’s approximate net deferred tax asset as of December 31, 2014 and 2013 was as follows:

Deferred Tax Asset:	December 31, 2014			December 31, 2013
Net operating loss carryforward	$	678,139		$	60,318
Total deferred tax asset		678,139			60,318
Less: deferred tax liability: deferred rent receivable		(41,287	)		-
Net deferred tax assets before valuation allowance		636,852			60,318
Valuation allowance		(636,852	)		(60,318	)
Net deferred tax asset	$	-		$	-

The net operating loss carryforward was $1,674,418 at December 31, 2014. The Company provided a valuation allowance equal to the deferred income tax asset for the years ended December 31, 2014 and 2013 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. The increase in the allowance was $576,534 in 2014. The potential tax benefit arising from the loss carryforward will expire in 2034.

Additionally, the future utilization of the net operating loss carryforward to offset future taxable income may be subject to an annual limitation as a result of ownership changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2014 and 2013 Corporate Income Tax Returns are subject to Internal Revenue Service examination.

Interest and penalties associated with unrecognized tax benefits, if any, are classified as additional income taxes in the statement of operations.

F-21

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

NOTE 10 - COMMITMENTS

Lease

On February 1, 2014 the Company executed a 39-months operating lease for its office space. The annual rent during year one is $31,302, year two is $32,241 and year three $33,215. The Company also paid a security deposit of $3,267. Rent expense for the years ended December 31, 2014 and 2013 was $21,313 and $0, respectively

Future minimum lease payments under non-cancelable operating leases at December 31, 2014 are as follows:

Years ending December 31,
2015	$	32,006
2016		37,471
2017		9,804
Total minimum non-cancelable operating lease payments	$	79,281

NOTE 11 – CONCENTRATIONS

Rental income and rent receivable – related parties

During 2014, the Company entered into three lease agreements with non-profit companies whose director is a beneficial stockholder of the Company. For the year ended December 31, 2014, rental income associated with these three leases amounted to $110,527.

Additionally, for the year ended December 31, 2014, in connection with a lease with a company owned by a beneficial stockholder of the Company, the Company recorded rental income of $30,000. . For the year ended December 31, rental revenues – related parties represents 30% of total revenues. At December 31, 2014, deferred rent receivable – related party amounted to $28,027. A reduction in sales from or loss of such related party lessees would have a material adverse effect on our consolidated results of operations and financial condition.

NOTE 12 – SUBSEQUENT EVENTS

Common shares issued

On January 10, 2015, the Company issued an aggregate of 30,000 shares of common stock to three members of the Company’s board of directors (10,000 each) for services rendered. The shares were valued at their fair value of $30,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in January 2015, the Company recorded stock-based compensation expense of $30,000.

On January 20, 2015, the Company cancelled 225,000 shares of common stock and returned proceeds of $2,250 to an investor.

In May 2015, the Company issued 1,000,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended, at a price of $1.00 per share for proceeds of $1,000,000.

On June 16, 2015, the Company issued 50,000 shares of common stock in connection with a settlement agreement related to a claim. The shares were valued at their fair value of $50,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in June 2015, the Company recorded settlement expense of $50,000.

Effective September 1, 2015, the Company entered into a one year consulting agreement with an investor relations firm for investor relations services. In connection with this consulting agreement, the Company shall compensate the consultant for services rendered 1) cash of $5,000 per month and 2) 7,500 restricted shares to be issued within the first thirty days of the contractual period and an additional 7,500 shares of restricted stock to be issued at the end of month seven.

Stock options granted pursuant to consulting agreement

On May 6, 2015, the Company entered into a 36-month consulting agreement with a stockholder for business advisory services. In connection with this consulting agreement, the Company granted options to purchase 1,000,000 shares of the Company’s common stock to the stockholder under the Company’s 2014 Employee Stock Option Plan. The options vest as to 125,000 of such shares on July 1, 2015 and for each quarter thereafter through April 1, 2017, and expire on May 5, 2025 or earlier due to employment termination. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 120%; risk-free interest rate of 2.25%; and, an estimated holding period of 10 years. In connection with these options, the Company valued these options at a fair market value of approximately $948,000 and will record stock-based consulting expense over the vesting period.

F-22

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Employment agreement

On May 1, 2015, the Company entered into a five year employment agreement with an officer of the Company. In connection with this employment agreement, the Company issued 15,000 shares of its common stock. The shares were valued at their fair value of $15,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. Accordingly, the Company recorded compensation of $15,000. Additionally, the Company granted options to purchase 300,000 shares of the Company’s common stock to the employee under the Company’s 2014 Employee Stock Option Plan. The options vest as to 50,000 of such shares on August 1, 2015, 50,000 options vest of May 1, 2016 and for each year thereafter through May 1, 2020, and expire five years from the date of grant or earlier due to employment termination. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 120%; risk-free interest rate of 1.50%; and, an estimated holding period of 5 years. In connection with these options, the Company valued these options at a fair market value of approximately $248,000 and will record stock-based consulting expense over the vesting period.

Litigation

Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC

On April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (the “Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and had made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied in purchasing the land upon which that building was to be constructed, which the Defendants failed to deliver (See Note 3). On July 9, 2015 and amended and made effective on August 1, 2015 (the “Settlement Date”), the Company entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases. Under the terms of the settlement:

1.	The Company transferred title to its Bernalillo, New Mexico property to Defendants. At December 31, 2014, the carrying value of this property was $2,737,863. In connection with such property, the Company forfeited quarterly straight-lined rental revenue of approximately of $287,000 through September 2024. For the year ended December 31, 2014, rental revenues from this property amounted to $30,000.
2.	The Defendants returned 2,496,054 shares of common stock to the Company and the Company cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired.
3.	The Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 Acres of land and the Company acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000.
4.	The Company obtained water rights associated with property in Chino Valley, Arizona.

All of the settlement terms were settled as of August 1, 2015 except for the Company obtaining the water rights associated with property in Chino Valley, Arizona. The parties continue to work towards addressing this outstanding item. In the event that this post condition is not satisfied on or before November 1, 2015, it is anticipated that the Company will move to enforce the settlement agreement.

In connection with the settlement, on the Settlement Date, the Company did not record any settlement gain or loss.

Holistic Patient Wellness Group, LLC v. Zoned Properties, Inc.; Court Filed: Maricopa County Superior Court, Arizona; Case Number: CV2014-003047, which has been consolidated with CV2014-005642; Date Filed: March 14, 2014

F-23

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 and 2013

Litigation (continued)

Holistic Patient Wellness Group, LLC (“HPWG”) leased from the Company retail space in Tempe, Arizona to operate a medical marijuana dispensary. HPWG claims that the Company violated the terms of the lease for various reasons. On May 23, 2014, the Company concluded that HPWG had breached the lease, and terminated the lease and retook possession of the property. On May 27, 2014, HPWG filed a petition for an order to show cause, seeking an expedited ruling on its claim that Zoned violated the terms of the stipulated preliminary injunction. The court re-set the hearing multiple times, ultimately continuing it until March 17, 2015. In the interim, and in part to mitigate its own damages, the Company leased the property to a new tenant. At the hearing, HPWG sought sanctions in the amount of $1,000 per day for the more than 300 days it had been “locked out” of the premises (reduced from its initial demand of $10,000 per day) and an order allowing them back into the property. After conducting the hearing, the court found that the Company did not violate the terms of the stipulated injunction and denied HPWG’s petition.

On April 27, 2015, two entities related to HPWG moved for leave to amend their answer and counterclaim to assert several new claims against new parties, including the Company. On June 2, 2015, the court sua sponte denied the motion. A status hearing occurred on August 17, 2015, during which time the court granted HPWG renewed request to file a motion for leave to amend their answer and counterclaim and to assert several new claims against new parties, including the Company. On October 20, 2015, HPWG filed a motion to enforce a purported settlement agreement with the Company and to dismiss its claims against the Company. The Company responded in opposition to the motion, because (i) the mutual release in the purported settlement agreement was too broad in its scope, and (ii) the Company wants to preserve its right to seek an award of attorney’s fees and costs against HPWG. HPWG’s reply in support of its motion is due December 7, 2015. The Company anticipates that the court will rule on the motion soon thereafter. The Company believes that any settlement damages with HPWG would be nominal.

To date, the motion for leave to amend has not been filed. If and when it is filed, the Company will evaluate any grounds for opposing the motion. The Company believes that any settlement damages with HPWG would be nominal.

Related party lease agreements

In August 2015, the Company entered into two lease agreements with a company owned by a beneficial shareholder of the Company to lease space in Tempe, Arizona and Chino Valley, Arizona. The Tempe lease commenced on September 1, 2015 and expires on August 31, 2035 with base monthly rent $13,500, subject to a 5% annual increase. The Chino Valley lease commenced on August 1, 2015 and expires on July 31, 2035 with base monthly rent $30,000, subject to a 5% annual increase

Operating lease

On January 27, 2015, the Company executed a 24-month operating lease for its new office space. The Company was able to negotiate a lower rental payment by pre-paying the entire sum of the 24-months rental payments under the lease agreement in the amount of $57,358. The Company also paid a security deposit of $2,600.

New subsidiaries

In 2015, the Company incorporated the following wholly-owned limited liability companies:

● Zoned Oregon Properties, LLC was organized in the State of Oregon on June 16, 2015.

● Zoned Colorado Properties, LLC was organized in the State of Colorado on September 17, 2015.

● Zoned Illinois Properties, LLC was organized in the State of Illinois on July 15, 2015.

F-24

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

(Unaudited)

F-25

ZONED PROPERTIES, INC. AND SUBSIDIARIES

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

	Page
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, 2015 (Unaudited) and December 31, 2014	F-27
Condensed Consolidated Statements of Operations – For the Nine Months ended September 30, 2015 and 2014 (Unaudited)	F-28
Condensed Consolidated Statements of Cash Flows – For the Nine Months ended September 30, 2015 and 2014 (Unaudited)	F-29
Notes to Unaudited Condensed Consolidated Financial Statements	F-30 - F-42

F-26

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2015			2014
	(Unaudited)
ASSETS
Cash	$	1,358,399		$	1,066,377
Rental properties, net (See Note 3)		7,231,052			8,499,705
Rent receivable		1,979			-
Deferred rent receivable		12,778			-
Deferred rent receivable - related party		220,649			28,027
Real estate tax escrow		59,994			39,122
Prepaid expenses and other current assets		177,369			175,313
Property and equipment, net		48,186			45,940
Security deposits		8,445			7,024
TOTAL ASSETS	$	9,118,851		$	9,861,508
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Mortgage payable	$	2,100,000		$	2,100,000
Convertible note payable, net		500,000			500,000
Convertible note payable, net - related party		500,000			500,000
Accounts payable		68,242			27,835
Accrued expenses		128,614			57,837
Accrued expenses - related parties		41,792			47,959
Security deposits payable		41,063			18,100
Total Liabilities		3,379,711			3,251,731
Commitments and Contingencies (See Note 9)
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized; 2,000,000 shares issued and outstanding at September 30, 2015 and December 31, 2014 ($1.00 per share liquidation preference)		2,000			2,000
Common stock: $.001 par value, 100,000,000 shares authorized; 17,060,250 and 18,676,304 issued and outstanding at September 30, 2015 and December 31, 2014, respectively		17,060			18,676
Additional paid-in capital		19,188,697			18,912,548
Subscription receivable		(4,000	)		(4,000	)
Accumulated deficit		(13,464,617	)		(12,319,447	)
Total Stockholders' Equity		5,739,140			6,609,777
Total Liabilities and Stockholders' Equity	$	9,118,851		$	9,861,508

See accompanying notes to unaudited condensed consolidated financial statements.

F-27

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Nine Months Ended
	September 30,
	2015			2014
	(Unaudited)			(Unaudited)
REVENUES:
Rental revenues	$	297,695		$	222,694
Rental revenues - related parties		625,370			-
Total Revenues		923,065			222,694
OPERATING EXPENSES:
Compensation and benefits		298,411			3,873,809
Professional fees		1,011,008			866,220
General and administrative expenses		198,516			94,786
Depreciation and amortization		110,060			74,252
Property operating expenses		104,016			54,208
Real estate taxes		56,622			27,606
Consulting fees - related parties		53,511			14,167
Settlement expense		67,500			-
Total Operating Expenses		1,899,644			5,005,048
LOSS FROM OPERATIONS		(976,579	)		(4,782,354	)
OTHER INCOME (EXPENSES):
Interest expenses		(145,325	)		(161,652	)
Interest expenses - related parties		(26,250	)		(82,913	)
Other income		2,545			41,019
Interest income		439			-
Total Other Expenses, net		(168,591	)		(203,546	)
LOSS BEFORE INCOME TAXES		(1,145,170	)		(4,985,900	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(1,145,170	)	$	(4,985,900	)
NET LOSS PER COMMON SHARE:
Basic and Diluted	$	(0.06	)	$	(1.15	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and Diluted		18,491,082			4,353,112

See accompanying notes to unaudited condensed consolidated financial statements.

F-28

ZONED PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For  the Nine Months Ended
	September 30,
	2015			2014
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,145,170	)	$	(4,985,900	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		110,060			74,252
Stock-based compensation		55,000			4,051,270
Stock-based settlement expense		50,000			-
Accretion of stock-based stock option expense		578,386			-
Deferred rent receivable		(12,778	)		-
Deferred rent receivable - related parties		(192,622	)		-
Amortization of debt discount		-			142,564
Gain on sale of note receivable		-			(41,019	)
Change in operating assets and liabilities:
Rent receivable		(1,979	)		699
Real estate tax escrow		(20,872	)		(16,386	)
Prepaid expenses and other assets		(2,056	)		(129,744	)
Security deposits		(1,421	)		(7,024	)
Accounts payable		40,407			41,899
Accrued expenses		70,777			23,314
Accrued expenses - related parties		(6,167	)		3,000
Security deposits payable		22,963			23,100
NET CASH USED IN OPERATING ACTIVITIES		(455,472	)		(819,975	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note receivable		-			211,019
Acquisition of land		(200,000	)		(2,793,000	)
Acquisition of buildings and improvements		(43,295	)		(6,062,980	)
Acquisition of property and equipment		(6,961	)		(45,109	)
NET CASH USED IN INVESTING ACTIVITIES		(250,256	)		(8,690,070	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock		1,000,000			7,734,370
Redemption of common stock		(2,250	)		(10,000	)
Proceeds from sale of preferred stock		-			2,000
Redemption of preferred stock		-			(700	)
Proceeds from related party loan		-			200,387
Repayment of related party loan		-			(200,387	)
Proceeds from convertible debt		-			1,000,000
Proceeds from mortgage payable		-			2,100,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		997,750			10,825,670
NET INCREASE IN CASH		292,022			1,315,625
CASH, beginning of year		1,066,377			11,964
CASH, end of period	$	1,358,399		$	1,327,589
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest
Interest	$	145,325		$	108,064
Income taxes	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for land	$	-		$	16,667
Issuance of common stock for convertible debt and interest	$	-		$	396,883
Reclassification of embedded conversion option on convertible debt to paid-in capital upon conversion	$	-		$	170,000
Issuance of common stock for future services	$	-		$	240,000
Purchase and cancellation and treasury shares in exchange for net properties pursuant to settlement	$	1,406,603		$	-

See accompanying notes to unaudited condensed consolidated financial statements.

F-29

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

Organization

Zoned Properties, Inc., formerly Vanguard Minerals Corp. (the “Company”) was incorporated in the State of Nevada on August 25, 2003. On May 2, 2006, the Company changed its name to Knewtrino, Inc. On August 10, 2007, the Company changed its name to Vanguard Minerals Corporation. On October 2, 2013, the Company changed its name to Zoned Properties, Inc. to reflect its maturing business model that focuses on commercial property acquisition and development.

In September 2013, the Company issued the former CEO of the Company, 125,000 shares of common stock of the Company, representing approximately 91.54% of the issued and outstanding voting power of the Company, in exchange for his assumption of liabilities of the Company amounting to $150,000. The transaction resulted in a change in control of the Company.

The Company is a strategic real estate investment firm whose primary focus is acquiring commercial properties that face unique zoning challenges. The Company acquires properties that have the potential to increase value within their surrounding communities. The Company manages a portfolio of properties that it owns, leases, and provides direct development on each property it acquires. This can include complete architectural design and subsequent build-outs, general support, landscaping, general up-keep, facilities management, and state of the art security systems.

The Company incorporated the following wholly-owned limited liability companies:

● Gilbert Property Management, LLC was organized in the State of Arizona on February 10, 2014.

● Tempe Industrial Properties, LLC was organized in the State of Arizona on February 19, 2014.

● Chino Valley Properties, LLC was organized in the State of Arizona on April 15, 2014.

● Kingman Property Group, LLC was organized in the State of Arizona on April 15, 2014.

● Green Valley Group, LLC (“Green Valley”) organized in the State of Arizona on April 15, 2014.

● Zoned Oregon Properties, LLC was organized in the State of Oregon on June 16, 2015.

● Zoned Colorado Properties, LLC was organized in the State of Colorado on September 17, 2015.

● Zoned Illinois Properties, LLC was organized in the State of Illinois on July 15, 2015.

Basis of Presentation and Principals of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates for the nine months ended September 30, 2015 and 2014 include the collectability of rent, the useful life of rental properties, property and equipment, assumptions used in assessing impairment of long-term assets, valuation allowances for deferred tax assets, and the fair value of non-cash equity transactions, including options and stock-based compensation.

F-30

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair value of financial instruments

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, note receivable, deferred rent receivable, prepaid expenses and other current assets, real estate tax escrow, short-term notes payable, accounts payable, accrued expenses, and other payables approximate their fair market value based on the short-term maturity of these instruments.

Risks and Uncertainties

The Company’s operations are subject to risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. The Company conducts a significant portion of its business in Arizona.  Consequently, any significant economic downturn in the Arizona market could potentially have an effect on the Company’s business, results of operations and financial condition.

Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. The majority of the Company’s cash and cash equivalents are held at major commercial banks, which may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. To date, the Company has not experienced any losses on its invested cash. The Company had no cash equivalents at September 30, 2015 and December 31, 2014, respectively. At September 30, 2015, the Company had approximately $1,056,000 of cash in excess of FDIC limits.

Accounts receivable

The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expense.

Real Estate Tax Escrow

Real estate tax escrow consists of funds held for the purpose of real estate taxes owed. These funds will be released as required to satisfy tax payments as due.

Rental Properties

Rental properties are carried at cost less accumulated depreciation and amortization.  Betterments, major renovations and certain costs directly related to the improvement of rental properties are capitalized. Maintenance and repair expenses are charged to expense as incurred.  Depreciation is recognized on a straight-line basis over estimated useful lives of the assets, which range from 7 to 39 years. Tenant improvements are amortized on a straight-line basis over the lives of the related leases, which approximate the useful lives of the assets.  

Upon the acquisition of real estate, we assess the fair value of acquired assets (including land, buildings and improvements, identified intangibles, such as acquired above-market leases and acquired in-place leases) and acquired liabilities (such as acquired below-market leases) and allocate the purchase price based on these assessments.  The Company assesses fair value based on estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information.  Estimates of future cash flows are based on a number of factors including historical operating results, known trends, and market/economic conditions.  The Company records acquired intangible assets (including acquired above-market leases and acquired in-place leases) and acquired intangible liabilities (including below-market leases) at their estimated fair value.  The Company amortizes acquired above-and below-market leases as a decrease or increase to rental income, respectively, over the lives of the respective leases.  Amortization of acquired in-place leases is included as a component of depreciation and amortization. For the nine months ended September 30, 2015 and 2014, there were no acquired in-place leases.

F-31

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Rental Properties (continued)

The Company’s properties, including any related intangible assets, are individually reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Impairment analyses are based on our current plans, intended holding periods and available market information at the time the analyses are prepared. If the Company’s estimates of the projected future cash flows, anticipated holding periods, or market conditions change, the Company’s evaluation of impairment losses may be different and such differences could be material to its consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results. Plans to hold properties over longer periods decrease the likelihood of recording impairment losses. For the nine months ended September 30, 2015 and 2014, the Company did not record any impairment losses.

The Company has capitalized land, which is not subject to depreciation.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation of property and equipment is provided utilizing the straight-line method over the estimated useful lives. The Company uses a five year life for office equipment, seven years for furniture and fixtures, and 5 to 10 years for vehicles. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

The Company examines the possibility of decreases in the value of these assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Revenue Recognition

Rental income includes base rents that each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of rent steps and rent abatements under the leases.  We commence rental revenue recognition when the tenant takes possession of the leased space or controls the physical use of the leased space and the leased space is substantially ready for its intended use. Rental income also includes the amortization of acquired above-and below-market leases, net.  Beginning in 2014, the Company began generating revenues from the non-residential rental properties.  

Certain of the Company’s leases currently contain rental increases at specified intervals. The Company records as an asset, and include in revenue, rents receivable that will be received if the tenant makes all rent payments required through the expiration of the initial term of the lease. Deferred rents receivable in the accompanying balance sheets includes the cumulative difference between rental revenue recorded on a straight-line basis and rents received from the tenants in accordance with the lease terms. Accordingly, management determines to what extent the deferred rent receivable applicable to each specific tenant is collectible. The Company reviews material rents receivable and takes into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of rent receivable with respect to any given tenant is in doubt, we record an increase in the allowance for uncollectible accounts or the Company records a direct write-off of the specific rent receivable. No such reserves related to deferred rent receivable have been recorded as of September 30, 2015 and December 31, 2014. . For the nine months ended September 30, 2015, in connection with certain related party leases, the Company only included in revenues the amount of rents received from the related parties in accordance with the lease terms since on August 1, 2015, the Company transferred title to its Bernalillo, New Mexico and the respective related party lease as part of a settlement agreement (See Note 9), and cancelled a related party lease in June 2015.

F-32

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

	September 30, 2015		December 31, 2014
Convertible debt		200,000		200,000
Stock options		1,300,000		-

Income Tax

Deferred income tax assets and liabilities arise from temporary differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a "more-likely-than-not" threshold. As of September 30, 2015 and December 31, 2014, the Company does not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying consolidated financial statements.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the service period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

F-33

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an update ("ASU 2014-09") Revenue from Contracts with Customers.  ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most of the existing revenue recognition guidance.  ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and also requires certain additional disclosures.  ASU 2014-09 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2016.  The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.

In June 2014, the FASB issued an update (“ASU 2014-12”) to ASC Topic 718, Compensation – Stock Compensation.  ASU 2014-12 requires an entity to treat performance targets that can be met after the requisite service period of a share based award has ended, as a performance condition that affects vesting.  ASU 2014-12 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2015.  The Company is currently evaluating the impact of the adoption of ASU 2014-12 on its consolidated financial statements.

In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, that will require management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. In connection with each annual and interim period, management will assess if there is substantial doubt about an entity’s ability to continue as a going concern within one year after the issuance date. Substantial doubt exists if it is probable that the entity will be unable to meet its obligations within one year after the issuance date. The new standard defines substantial doubt and provides example indicators. Disclosures will be required if conditions give rise to substantial doubt. However, management will need to assess if its plans will alleviate substantial doubt to determine the specific disclosures. This standard is effective for public entities for annual periods ending after December 15, 2016. Earlier application of this standard is permitted. This standard is not expected to have a material effect on our financial position, results of operations and cash flows.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

NOTE 3 – RENTAL PROPERTIES

On January 22, 2014, the Company entered into a real estate purchase agreement with a stockholder, pursuant to which the Company acquired land located in Gilbert, Arizona for $266,667, of which $250,000 was paid in cash, and $16,667 was paid by issuing 139 shares of common stock of the Company at an agreed price of $120 per share based on recent sales of the Company’s common stock in a private placement.

On January 29, 2014, the Company entered into a purchase and consulting agreement (the “Ultra Agreement”) with Ultra Health, LLC., a related party due to common ownership and investments made by beneficial stockholders of the Company (“Ultra Health”), pursuant to which the Company was to acquire a 1,536 square foot modular building to be delivered and erected on the purchased land for total cash payments of $675,000. Subsequent to the purchase of this land and building, these real estate assets were transferred to Gilbert Property, LLC, a wholly-owned subsidiary of the Company. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. The Company reviews it rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, the Company determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss - related party of $675,000.

F-34

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 3 – RENTAL PROPERTIES (continued)

On July 9, 2015 and effective August 1, 2015, the Company entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases (See Note 9).

On March 7, 2014, the Company entered into a real estate purchase agreement with Maryland LLC, an Arizona limited liability company, pursuant to which the Company acquired land and a building located in Tempe, Arizona, for total payment of $4,600,000, of which $2,500,000 was paid by cash, and a $2,100,000 promissory note from Maryland LLC. The transaction was completed and the title of the land was transferred to the Company (See Note 7). Subsequent to the purchase, the Company spent $206,370 on building improvements and equipment.

On April 4, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired a modular building in Green Valley, Arizona for total payment of $87,073. On October 22, 2014, Green Valley entered into a real estate purchase and sale agreement with a company owned by Duke Rodriguez who became beneficial stockholder of the Company in July 2014 (”Duke Rodriguez”), pursuant to which the Company acquired the property located in Green Valley, AZ for a purchase price of $400,000.

On May 28, 2014, the Company entered into a purchase agreement with Ultra Health pursuant to which the Company acquired three parcels of land and a building in Mohave County, Arizona for total payments of $260,000. Subsequent to the purchase, the Company spent $27,538 in improvements.

On August 12, 2014, the Company entered into a real estate purchase agreement with a company owned by Duke Rodriguez, pursuant to which the Company acquired the property located in Bernalillo County, New Mexico consisting of 11.30 acres for total payments of $2,750,000. Pursuant to a settlement agreement (see Note 9), the Company transferred title to this property to Defendants. On August 1, 2015 (the “Settlement Date”) and December 31, 2014, the carrying value of this property was $2,719,658 and $2,737,863, respectively.

On the Settlement Date, the Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 acres of land and the Company acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000. (see Note 9).

At September 30, 2015 and December 31, 2014, rental properties, net consisted of the following:

Description	Useful Life (Years)		September 30, 2015			December 31, 2014
Building and building improvements		39	$	4,791,166		$	5,364,815
Land		-		2,589,667			3,209,668
Equipment		7		23,164			23,164
Rental properties, at cost				7,403,997			8,597,647
Less: accumulated depreciation				(172,945	)		(97,942	)
Rental properties, net			$	7,231,052		$	8,499,705

For the nine months ended September 30, 2015 and 2014, depreciation and amortization of rental properties amounted to $105,345 and $73,759, respectively.

F-35

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 4 - PROPERTY AND EQUIPMENT

At September 30, 2015 and December 31, 2014, property and equipment consisted of the following:

Description	Useful Life (Years)	September 30, 2015			December 31, 2014
Vehicle and site trailers	5 – 10	$	42,555		$	42,555
Office furniture and equipment	5 - 7		12,225			5,264
			54,780			47,819
Less: accumulated depreciation			(6,594	)		(1,879	)
Property and equipment, net		$	48,186		$	45,940

For the nine months ended September 30, 2015 and 2014, depreciation expense amounted to $4,715 and $493, respectively.

NOTE 5 – RELATED PARTY TRANSACTIONS

(A) Note receivable- related party

On December 9, 2013, the Company entered into a Note Purchase and Loan Participation Assignment Agreement (the “Note Purchase Agreement”) with and amongst MAC CAM LLC, a limited liability company (“MAC CAM”), partially owned by the Company’s former President, a third party entity, and five individuals two of which are considered related parties, pursuant to which the Company issued two convertible promissory notes ($85,000 to MAC CAM and $85,000 to a stockholder) aggregating $170,000 to purchase a Promissory Note dated February 19, 2013, in the original principal amount of $209,400 and with a maturity date of February 1, 2018, which is secured by a Mortgage/Deed of Trust on Real Property recorded March 5, 2013 in Document No. 2013-01174, of the Official Records of the County Recorder of Graham County, Arizona. On March 12, 2014, the Company sold this note for a cash payment of $210,500. For the nine months ended September 30, 2014, the Company reported a gain of $41,019 which is reflected as other income on the accompanying condensed consolidated statements of operations.

(B) Convertible note payable – related party

On August 20, 2014, the Company received $500,000 from a beneficial common stockholder who also holds 50% of the issued preferred stock pursuant to the terms of a Senior Convertible Debenture. The Debenture bears interest at 7% and the principal balance and all accrued interest is due on the maturity date of August 20, 2017. The holder has the option after 12 months to convert all or a portion of the Debenture into shares of the Company’s common stock at the conversion price of $5.00 per share. As of September 30, 2015 and December 31, 2014, the principal balance due and owing under this Debenture is $500,000. As of September 30, 2015 and December 31, 2014, accrued interest payable amounted to $38,792 and $12,542, respectively, and is included in accrued expenses – related parties on the accompanying condensed consolidated balance sheets.

(C) Preferred stock

On July 22, 2014, the Board of Directors of the Company accepted a subscription agreement from the McLaren Family LLLP (“MFT”), whose general partner is Alex C. McLaren, a Director and the father of the Company’s current President and CEO, Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. In addition to a beneficial ownership of common stock, MFT holds 50% of the current Preferred Stock that controls the Company.

On July 22, 2014, the Company accepted a subscription agreement from Gregory Johnston, a beneficial shareholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock for cash of $1,000 (See Note 8). In addition to a beneficial ownership of common stock, Mr. Johnston holds 50% of the current Preferred Stock that controls the Company.

F-36

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 5 – RELATED PARTY TRANSACTIONS (continued)

(D) Employment agreement

On July 31, 2014, the Company entered into a 10 year employment agreement with a beneficial stockholder of the Company, for annual compensation of $85,000. The Company may also grant this employee/beneficial stockholder stock options of up to 20,000 shares per year for completed service and may receive a bonus at the discretion of the Company’s board of directors. Additionally, as part of the employment agreement, the Company entered into a golden parachute agreement with this employee/beneficial stockholder which expires on December 31, 2039, unless terminated earlier as defined in the agreement, whereby, no benefits under this agreement shall be payable unless there is a change in control of the Company. In addition to other terms in the agreement, upon a change in control of the Company as defined in the agreement, if employment by the Company shall be terminated (a) by the Corporation other than for cause, retirement or disability or (b) by this employee for good reason, then he shall be entitled to certain benefits. On July 31, 2015, the employee/beneficial resigned and waived his rights in any such benefits, and amounts due were paid in full. At September 30, 2015 and December 31, 2014, amounts due to this employee/beneficial stockholder under this agreement amounted to $0 and $35,417, respectively, which has been included in accrued expenses – related parties on the accompanying condensed consolidated balance sheets.

(E) Related party lease agreements

During 2014, the Company entered into lease agreements with non-profit companies and other companies whose director is a beneficial stockholder of the Company. Additionally, in August 2015, the Company entered into two lease agreements with a company owned by this beneficial shareholder of the Company to lease space in Tempe, Arizona and Chino Valley, Arizona. The Tempe lease commenced on September 1, 2015 and expires on August 31, 2035 with base monthly rent $13,500, subject to a 5% annual increase. The Chino Valley lease commenced on August 1, 2015 and expires on July 31, 2035 with base monthly rent $30,000, subject to a 5% annual increase. For the nine months ended September 30, 2015 and 2014, rental income associated with these related party leases amounted to $625,370 and $0, respectively. At September 30, 2015 and December 31, 2014, deferred rent receivable – related party amounted to $220,649 and $28,027, respectively. In connection with these leases, the related party tenants shall pay security deposits aggregating $60,000 payable in twelve monthly installments of $5,000 beginning September 1, 2015

NOTE 6 – CONVERTIBLE NOTE PAYABLE

On August 20, 2014, the Company received $500,000 from a stockholder pursuant to the terms of a Senior Convertible Debenture. The Debenture bears interest at 7% and is payable monthly and the principal balance and any remaining unpaid interest is due on the maturity date of August 20, 2017. The holder has the option after 12 months to convert all or a portion of the Debenture into shares of the Company’s common stock at the conversion price of $5.00 per share. As of September 30, 2015 and December 31, 2014, the principal balance due and owing under this Debenture is $500,000.

NOTE 7 – MORTGAGE PAYABLE

On March 7, 2014 the Company executed a $2,100,000 mortgage payable to acquire real estate having a carrying value of approximately $4,600,000. The mortgage bears interest at 7.5%. Monthly interest only payments began April 7, 2014 and continue each month thereafter until paid. The entire unpaid balance and accrued interest is due on March 7, 2019, the maturity date of the mortgage and is secured by the underlying property. The mortgage terms do not allow participations by the lender in either the appreciation in the fair value of the mortgaged real estate project or the results of operations of the mortgaged real estate project.

F-37

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 8 – STOCKHOLDERS’ EQUITY

(A) Preferred Stock

On December 13, 2013, the Board of Directors of the Company authorized and approved to create a new class of Preferred Stock consisting of 5,000,000 shares authorized, $.001 par value. The preferred stock is not convertible into any other class or series of stock. The holders of the preferred stock are entitled to fifty (50) votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding. Upon liquidation, the holders of the shares will be entitled to receive $1.00 per share plus redemption provision before assets distributed to other shareholders. The holders of the shares are entitled to dividends equal to common share dividends.

Once any shares of Preferred Stock are outstanding, at least 51% of the total number of shares of Preferred Stock outstanding must approve the following transactions:

a.	Alter or change the rights, preferences or privileges of the Preferred Stock.
b.	Create any new class of stock having preferences over the Preferred Stock.
c.	Repurchase any of our common stock.
d.	Merge or consolidate with any other company, except our wholly-owned subsidiaries.
e.	Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, or charge or encumbrance or security interest in or pledge of, or sell and leaseback, in all or substantially all of our property or business.
f.	Incur, assume or guarantee any indebtedness maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by us, except for operating leases and obligations assumed as part of the purchase price of property.

On July 22, 2014, the Board of Directors accepted a subscription agreement from the McLaren Family LLLP, whose general partner is Alex C. McLaren, a Director and the father of the Company’s current President and CEO Bryan McLaren, for the acquisition of 1,000,000 shares of the Company’s Preferred Stock for cash of $1,000. The Company simultaneously accepted a subscription agreement from a beneficial common stockholder, for the acquisition of 1,000,000 shares of the Company’s preferred stock for cash of $1,000.

In connection with the issuance of super voting control preferred stock on July 22, 2014 (herein referred to as the “Valuation Date”), the Company assessed the fair value of the issued preferred stock issued to a MAC CAM, Gregory Johnston and McLaren Family LLLP for purposes of determining the valuation as set forth in ASC 820–10–35–37 Fair Value in Financial Instruments. Based on an independent appraisal report which utilized the market approach, on the Valuation Date, for the nine months ended September 30, 2014, the Company recorded stock-based compensation of $3,365,000. The preferred stock issued was valued based upon industry specific control premiums and the Company’s market cap at the time of the transaction. The market approach was utilized to arrive at an indication of equity value based on recent transactions involving the Company’s common stock. The control premium for the Company was based on publicly traded companies or comparable entities which have been recently acquired in arm’s–length transactions. The Company estimated the control premium for the voting control of the preferred stock based on Real Estate industries at 17.5% as of July 22, 2014, based on comparable publicly traded data, adjusted for company-specific factors.

(B) Common stock issued/redeemed for cash

On January 20, 2015, the Company cancelled 225,000 shares of common stock and returned proceeds of $2,250 to an investor.

In May 2015, the Company issued 1,000,000 shares of common stock to accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended, at a price of $1.00 per share for proceeds of $1,000,000.

(C) Common stock issued for services

On January 10, 2015, the Company issued an aggregate of 30,000 shares of common stock to three members of the Company’s board of directors (10,000 each) for services rendered. The shares were valued at their fair value of $30,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in January 2015, the Company recorded stock-based compensation expense of $30,000.

F-38

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 8 – STOCKHOLDERS’ EQUITY (continued)

(C) Common stock issued for services (continued)

On May 1, 2015, the Company entered into a five year employment agreement with an officer of the Company. In connection with this employment agreement, the Company issued 15,000 shares of its common stock. The shares were valued at their fair value of $15,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. Accordingly, the Company recorded compensation expense of $15,000.

In July 2015, the Company issued 2,500 shares of common stock to an employee for services rendered. The shares were valued at their fair value of $2,500 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in July 2015, the Company recorded compensation expense of $2,500.

Effective September 1, 2015, the Company entered into a one year consulting agreement with an investor relations firm for investor relations services. In connection with this consulting agreement, the Company shall compensate the consultant for services rendered 1) cash of $5,000 per month and 2) 7,500 restricted shares to be issued within the first thirty days of the contractual period and an additional 7,500 shares of restricted stock to be issued at the end of month seven. On September 30, 2015, the Company issued 7,500 shares of restricted stock. The shares were valued at their fair value of $7,500 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. Accordingly, the Company recorded consulting fees of $7,500.

(D) Stock options granted pursuant to consulting and employment agreements

On May 6, 2015, the Company entered into a 36-month consulting agreement with a stockholder for business advisory services. In connection with this consulting agreement, the Company granted options to purchase 1,000,000 shares of the Company’s common stock under the Company’s 2014 Employee Stock Option Plan. The options vest as to 125,000 of such shares on July 1, 2015 and for each quarter thereafter through April 1, 2017, and expire on May 5, 2025 or earlier due to employment termination. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 120%; risk-free interest rate of 2.25%; and, an estimated holding period of 10 years. In connection with these options, the Company valued these options at a fair value of $948,400 and will record stock-based consulting expense over the vesting period. For the nine months ended September 30, 2015, the Company recorded consulting expense of $497,696 related to these options.

In connection with an employment agreement (see Note 10), the Company granted options to purchase 300,000 shares of the Company’s common stock to the employee under the Company’s 2014 Employee Stock Option Plan. The options vest as to 50,000 of such shares on August 1, 2015, 50,000 options vest on May 1, 2016 and for each year thereafter through May 1, 2020, and expire five years from the date of grant or earlier due to employment termination. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 120%; risk-free interest rate of 1.50%; and, an estimated holding period of 5 years. In connection with these options, the Company valued these options at a fair value of $248,100 and will record stock-based consulting expense over the vesting period. For the nine months ended September 30, 2015, the Company recorded stock-based compensation expense of $80,690.

At September 30, 2015, there were 175,000 options vested and exercisable. As of September 30, 2015, there was $618,114 unvested stock-based compensation expense to be recognized through April 2020. The aggregate intrinsic value at September 30, 2015 was $0 and was calculated based on the difference between the Company’s share price established in its most recent PPM and the exercise price of the underlying options.

(E) Common stock issued for settlement

On June 16, 2015, the Company issued 50,000 shares of common stock in connection with a settlement agreement related to a claim. The shares were valued at their fair value of $50,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in June 2015, the Company recorded settlement expense of $50,000.

F-39

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 8 – STOCKHOLDERS’ EQUITY (continued)

(F) Common stock redeemed and cancelled

On August 1, 2015, the Defendants returned 2,496,054 shares of common stock to the Company and the Company cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired. (See Note 9).

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Litigation settlement

Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC

On April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and had made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied in purchasing the land upon which that building was to be constructed, which the Defendants failed to deliver (See Note 3). On June 8, 2015, the Company filed a motion to dismiss the counterclaim. The motion to dismiss has been fully-briefed and was set for oral argument on August 7, 2015. On July 9, 2015 and effective August 1, 2015, the Company entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases. Under the terms of the settlement:

1.	On August 1, 2015, the Company transferred title to its Bernalillo, New Mexico property to Defendants. At June 30, 2015 and December 31, 2014, the carrying value of this property was $2,719,658 and $2,737,863, respectively. In connection with such property, the Company forfeited quarterly straight-lined rental revenue of approximately of $287,000 through September 2024. For the six months ended June 30, 2015, rental revenues from this property amounted to $120,000. The Company did not have rental revenue from this property in the comparable 2014 periods.
2.	The Defendants returned 2,496,054 shares of common stock to the Company and the Company cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired.
3.	The Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 Acres of land and the Company acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000.
4.	The Company shall obtain water rights associated with property in Chino Valley, Arizona.

In connection with the settlement, on the Settlement Date, the Company did not record any settlement gain or loss.

All of the settlement term were settled as of August 1, 2015 except for the Company obtaining the water rights associated with property in Chino Valley, Arizona. The parties continue to work towards addressing this outstanding item. It is anticipated that the Company will complete the transfer of such water rights prior to December 31, 2015. In the event that this condition is not satisfied, the Company will move to enforce this condition.

F-40

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 9 – CONTINGENCIES (continued)

Other legal matters

Holistic Patient Wellness Group, LLC v. Zoned Properties, Inc.; Court Filed: Maricopa County Superior Court, Arizona; Case Number: CV2014-003047, which has been consolidated with CV2014-005642; Date Filed: March 14, 2014

Holistic Patient Wellness Group, LLC (“HPWG”) leased from the Company retail space in Tempe, Arizona to operate a medical marijuana dispensary. HPWG claims that the Company violated the terms of the lease for various reasons. On May 23, 2014, the Company concluded that HPWG had breached the lease, and terminated the lease and retook possession of the property. On May 27, 2014, HPWG filed a petition for an order to show cause, seeking an expedited ruling on its claim that Zoned violated the terms of the stipulated preliminary injunction. The court re-set the hearing multiple times, ultimately continuing it until March 17, 2015. In the interim, and in part to mitigate its own damages, the Company leased the property to a new tenant. At the hearing, HPWG sought sanctions in the amount of $1,000 per day for the more than 300 days it had been “locked out” of the premises (reduced from its initial demand of $10,000 per day) and an order allowing them back into the property. After conducting the hearing, the court found that the Company did not violate the terms of the stipulated injunction and denied HPWG’s petition.

On April 27, 2015, two entities related to HPWG moved for leave to amend their answer and counterclaim to assert several new claims against new parties, including the Company. On June 2, 2015, the court sua sponte denied the motion. A status hearing occurred on August 17, 2015, during which time the court granted HPWG renewed request to file a motion for leave to amend their answer and counterclaim and to assert several new claims against new parties, including the Company. To date, the motion for leave to amend has not been filed. If and when it is filed, the Company will evaluate any grounds for opposing the motion. The Company believes that any settlement damages with HPWG would be nominal.

NOTE 10 - COMMITMENTS

Employment agreement

On May 1, 2015, the Company entered into a five year employment agreement with an officer of the Company. In connection with this employment agreement, the Company issued 15,000 shares of its common stock. The shares were valued at their fair value of $15,000 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. Accordingly, the Company recorded compensation of $15,000. Additionally, the Company granted options to purchase 300,000 shares of the Company’s common stock to the employee under the Company’s 2014 Employee Stock Option Plan. The options vest as to 50,000 of such shares on August 1, 2015, 50,000 options vest on May 1, 2016 and for each year thereafter through May 1, 2020, and expire five years from the date of grant or earlier due to employment termination. The fair value of this option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 120%; risk-free interest rate of 1.50%; and, an estimated holding period of 5 years. In connection with these options, the Company valued these options at a fair value of approximately $248,000 and will record stock-based consulting expense over the vesting period.

F-41

ZONED PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 and 2014

(Unaudited)

NOTE 11 – CONCENTRATIONS

Rental income and rent receivable – related parties

During 2014, the Company entered into lease agreements with non-profit companies whose director is a beneficial stockholder of the Company. Additionally, during the nine months ended September 30, 2015, the Company entered into lease agreements with companies owned by this beneficial stockholder of the Company. For the nine months ended September 30, 2015, rental revenue associated with these leases amounted to $625,370. For the nine months ended September 30, 2015, rental income - related parties represents 67.7% of total revenues. At September 30, 2015 and December 31, 2014, deferred rent receivable – related party amounted to $220,649 and $28,027, respectively. A reduction in sales from or loss of such related party leases would have a material adverse effect on our consolidated results of operations and financial condition.

NOTE 12 – SUBSEQUENT EVENTS

Common shares issued

On October 23, 2015, the Company issued 1,000 shares of its common stock in full settlement of accounts payable of $5,000.

On October 23, 2015, pursuant to an engagement letter, the Company issued 19,600 shares of its common stock to a Company majority owned by the Company’s chief financial officer (“CFO”) for services rendered. The shares were valued at their fair value of $19,600 using the recent sale price of the common stock on the dates of grant of $1.00 per common share. In connection with these shares, in October 2015, the Company recorded compensation expense of $19,600.

Rental property acquisitions

On October 2, 2015, the Company entered into a letter of intent with HQ Holdings LLC, a Colorado limited liability company, pursuant to which the Company shall acquire a building and underlying land located in Silt, Colorado, subject to certain contingencies such as the Company signing a lease agreement with HQ Holdings LLC and other closing conditions, for total payment of $430,000, of which $4,000 was paid as an earnest deposit and $426,000 in cash to be paid at closing which is expected to occur in the first quarter of 2016.

On October 27, 2015, the Company entered into a letter of intent RFSC LLC, a Colorado limited liability company, pursuant to which the Company shall acquire land and a building located in Carbondale, Colorado, subject to certain contingencies such as the Company signing a lease agreement with HQ Organic LLC, upon RFSC transferring existing its Marijuana Cultivation License to HQ Organic LLC, and other closing conditions for total payment of $1,000,000, of which $42,500 was paid as an earnest deposit and $957,500 in cash to be paid at closing which is expected to occur in the first quarter of 2016.

Employment agreement

On October 26, 2015, the Company entered into an engagement letter with CFO for services rendered through December 31, 2015 and for services to be rendered. Pursuant to the engagement letter, the Company shall pay to a base fee of $6,500 in cash per month of which $2,000 shall be deferred and paid upon the earlier of six months or a capital raise, and $3,500 per month payable quarterly in advance in common shares of the Company valued at the lower of the share price from the most recent capital raise or 60% of the bid price of the Company’s common stock at the last trading day of the previous quarter with a minimum number of common shares issuable per month of 1,250 shares.

F-42

ZONED PROPERTIES, INC.

1,351,915 Shares of

Common Stock

PROSPECTUS

____________, 2015

Until ____________, 2015, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II - INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Expenses incurred or expected relating to this prospectus and distribution are as follows:

	Amount to be Paid
Securities and Exchange Commission registration fee	$	1,571
Transfer agent fees		-
Printing and engraving expenses		-
Accounting fees and expenses		-
Legal fees and expenses		20,000
Blue sky fees and expenses		-
Miscellaneous		-
Total		21,571

All amounts are estimates, except the Securities and Exchange Commission (“SEC”) registration fee. We are paying all expenses of the offering listed above.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The only statue, charter provision, by-law, contract, or other arrangement under which any controlling person, director or officers of the Registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:

Our certificate of incorporation limits the liability of our directors and officers to the maximum extent permitted by Nevada law. Nevada law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for: (i) breach of the directors’ duty of loyalty; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) the unlawful payment of a dividend or unlawful stock purchase or redemption, and (iv) any transaction from which the director derives an improper personal benefit. Nevada law does not permit a corporation to eliminate a director’s duty of care, and this provision of our certificate of incorporation has no effect on the availability of equitable remedies, such as injunction or rescission, based upon a director’s breach of the duty of care.

The effect of the foregoing is to require us to indemnify our officers and directors for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. At present, the Company does not maintain any officers’ and directors’ liability insurance coverage.

Insofar as indemnification for liabilities may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy and is, therefore, unenforceable.

II-1

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Date	Name of Person or Entity	Nature of Each Offering	Juris-diction	Number of shares offered	Number of Shares sold	Price shares were offered	Amount paid to the Issuer	Trading Status of the shares	Legend
1/8/14	5 investors	Section 4(a)2	AZ	8,333	8,333	Mortgage receivables	Mortgage receivables	Restricted	Yes
1/8/14	Consultant	Rule 144	AZ	83	83	For Services	For Services	Restricted	Yes
1/22/14	Individual Resident	Rule 144	AZ	139	139	For land	For land	Restricted	Yes
3/4/14	Multiple Parties*	Rule 506	N/A	48,808	48,808	$120.00	$5,857,000	Restricted	Yes
3/4/14	Consultants	Rule 144	N/A	11.750	11,750	For Services	For Services	Restricted	Yes
7/28/14	Multiple Parties*	Rule 506	N/A	16,637,000	16,637,000	$.01	$166,370	Restricted	Yes
5/27/14	Paris Balaouras	Section 4(a)(2)	NV	2,083	2,083	N/A	N/A	Restricted	Yes
7/22/14	Gregory Johnston	Rule 506	WA	1,000,000 Preferred	1,000,000 Preferred	.001	$1,000	Restricted	Yes
7/22/14	McLaren Family LLLP**	Rule 506	AZ	1,000,000 Preferred	1,000,000 Preferred	.001	$1,000	Restricted	Yes
8/22/14	Multiple Parties***	Rule 506	N/A	1,700,000	1,700,000	$1.00	$1,700,000	Restricted	Yes
12/15/14	Multiple Parties****	Rule 506	N/A	150,000	150,000	$1.00	$150,000	Restricted	Yes
1/10/15	Multiple Parties*****	Section 4(a)(2)	N/A	30,000	30,000	$1.00	For Services	Restricted	Yes
5/1/15	Patricia Haugland	Section 4(a)(2)	N/A	15,000	15,000	$1.00	For Services	Restricted	Yes
5/6/15	Newbridge Financial, Inc. ******	Rule 506	N/A	500,000	500,000	$1.00	$500,000	Restricted	Yes
5/6/15	Phillip B. Kenny Trust	Rule 506	N/A	500,000	500,000	$1.00	$500,000	Restricted	Yes
6/16/15	Vincent Cunzio	Rule 506	N/A	45,000	45,000	$1.00	Settlement	Restricted	Yes
6/16/15	PCSR&P Holdings, LLC	Rule 506	N/A	5,000	5,000	$1.00	Settlement	Restricted	Yes
7/31/15	Kimberly Anderson	Section 4(a)(2)	N/A	2,500	2,500	$1,00	For Services	Restricted	Yes
9/30/15	Hayden IR	Section 4(a)(2)	N/A	7,500	7,500	$1,00	For Services	Restricted	Yes
10/20/15	Doug Reed	Section 4(a)(2)	N/A	1,000	1,000	$1.00	For Services	Restricted	Yes
10/20/2015	CFO Oncall, Inc.	Section 4(a)(2)	N/A	19,600	19,600	$1.00	For Services	Restricted	Yes

* Company issued stock to 52 investors under a rule 506(b) private placement offering.

** McLaren Family LLLP’s General partner is Alex C. McLaren, A Director and the father of the Company’s current President and CEO, Bryan McLaren.

*** Company issued stock to 4 investors under a rule 506(b) private placement offering.

**** Company issued stock to 3 investors under rule 506(b) private placement offering.

***** Company issued stock to three (3) board members as compensation for services.

****** Newbridge Financial, Inc.’s Executive Chairman is Guy Amico.

ITEM 16. EXHIBITS.

(a) Exhibits.

See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedules.

None.

II-2

ITEM 17. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(a) Rule 415 Offering. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale, State of Arizona, on November 25, 2015.

Zoned Properties, Inc.
By:	/s/ Bryan McLaren
	Bryan McLaren
	President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Bryan McLaren as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments and registration statements filed pursuant to Rule 462(b) under the Securities Act of 1933) to this Registration Statement and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorney-in-fact and agent or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on November 25, 2015.

Signature	Title
/s/ Bryan McLaren	President and Director
Bryan McLaren	(principal executive officer)
/s/ Adam Wasserman	Chief Financial Officer
Adam Wasserman	(principal financial and accounting officer)
/s/ Irvin Rosenfeld	Director
Irvin Rosenfeld
/s/ Art Friedman	Director
Art Friedman
/s/ Alex McLaren	Director
Alex McLaren

II-4

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
3.1*	Articles of Incorporation, as amended, of Zoned Properties, Inc.
3.2*	Bylaws of Zoned Properties, Inc.
5.1*	Form of Opinion of the Law Office of Legal & Compliance, LLC.
10.1+*	Employment Agreement dated as of July 31, 2014 by and between the registrant and Bryan McLaren.
10.2+*	Employment Agreement dated as of May 1, 2015 by and between the registrant and Patricia Haugland.
10.3+*	Board Member Agreement dated as of October 1, 2014 by and between the registrant and Alex McLaren.
10.4+*	Board Member Agreement dated as of October 1, 2014 by and between the registrant and Art Friedman.
10.5+*	Board Member Agreement dated as of August 1, 2014 by and between the registrant and Irvin Rosenfeld.
10.6*	Standard Industrial Commercial Multi-Tenant Lease – Gross dated as of April 1, 2015 by and between the registrant and Tech Group North America, Inc.
10.7*	Lease dated as of August 6, 2015 by and between Chino Valley Properties, LLC and CCC Holdings, LLC.
10.8*	First Amendment to Commercial Lease Agreement dated September 25, 2015 by and among Chino Valley Properties, LLC, CCC Holdings, LLC and Alan Abrams.
10.9*	Lease dated as of August 15, 2015 by and between the registrant and CCC Holdings, LLC.
10.10*	First Amendment to Commercial Lease Agreement dated September 25, 2015 by and among the registrant, CCC Holdings, LLC and Alan Abrams.
10.11*	Lease Agreement dated as of October 1, 2014 by and between Green Valley Group, LLC and Broken Arrow Herbal Center, Inc.
10.12*	Lease dated as of October 1, 2014 by and between Kingman Property Group, LLC and CJK, Inc.
10.13*	Agreement dated as of October 1, 2015 by and between the registrant and CFO OnCall.
10.14*	$2.1 Million Promissory Note dated March 7, 2014 in favor of Investment Property Exchange Services, Inc.
10.15*	Consulting Service Agreement dated May 6, 2015 between registrant and Newbridge Financial, Inc.
10.16*	Stock Option Grant Notice and Agreement between registrant and Newbridge Financial, Inc.
10.17*	Deed of Trust dated March 7, 2015 in favor of Investment Property Exchange Services, Inc. covering Tempe, AZ property.
21.1*	List of Subsidiaries.
23.1*	Consent of Independent Registered Public Accounting Firm.
23.2*	Consent of the Law Office of Legal & Compliance, LLC (included in Exhibit 5.1).

+ Management contract or compensatory plan or arrangement.

* Filed herewith

II-5

EX-3.1

Exhibit 3.1

 

 

EXHIBIT A

The Preferred Stock has the following rights and privileges:

1. The shares are not convertible into any other class or series of stock.

2. The holders of the shares are entitled to fifty (50) votes for each share held. Voting rights are not subject to adjustment for splits that increase or decrease the common shares outstanding.

3. Upon our liquidation, the holders of the shares will be entitled to receive $1.00 per share plus redemption provision before assets distributed to other shareholders.

4. The holders of the shares are entitled to dividends equal to common share dividends.

5. Once any shares of Preferred Stock are outstanding, at least 51% of the total number of shares of Preferred Stock outstanding must approve the following transactions:

a.	Alter or change the rights, preferences or privileges of the Preferred Stock.
b.	Create any new class of stock having preferences over the Preferred Stock.

c. Repurchase any of our common stock.

d. Merge or consolidate with any other company, except our wholly-owned subsidiaries.

e. Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, or charge or encumbrance or security interest in or pledge of, or sell and leaseback, in all or substantially all of our property or business.

f. Incur, assume or guarantee any indebtedness maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by us, except for operating leases and obligations assumed as part of the purchase price of property.

*******

 

 

 

 

 

 

ARTICLES OF INCORPORATION

OF

MONGOLIAN EXPLORATIONS LTD.

FIRST

The name of this corporation is MONGOLIAN EXPLORATIONS LTD.

SECOND

Its principal office in the State of Nevada is located at 50 West Liberty Street, Suite 880, Reno, Nevada. 89501. The name and address of its resident agent is The Nevada Agency and Trust Company, at the above address.

THIRD

The purpose or purposes for which the corporation is organized:

To engage in and carry on any lawful business activity or trade, and any activities necessary, convenient, or desirable to accomplish such purposes, not forbidden by law or by these articles of incorporation.

FOURTH

The amount of the total authorized capital stock of the corporation is Twenty-Five Thousand Dollars ($25,000.00) consisting of Twenty-Five Million (25,000,000) shares of common stock with a par value of $0.001 each.

FIFTH

The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the bylaws of this corporation.

There is 1 initial member of the Board of Directors whose name and address is:

NAME	POST-OFFICE ADDRESS
Ivan Bebek	#1605 - 750 West Pender Street, Vancouver, BC, Canada V6C 2T8

The number of members of the Board of Directors shall not be less than one nor more than thirteen.

SIXTH

The capital stock, after the amount of the subscription price, or par value, has been paid in shall not be subject to assessment to pay the debts of the corporation.

- 2 -

SEVENTH

The name and addresses of each of the incorporators signing the Articles of Incorporation are as follows:

NAME	POST-OFFICE ADDRESS
Ivan Bebek	#1605 - 750 West Pender Street, Vancouver, BC, Canada V6C 2T8

EIGHTH

The corporation is to have perpetual existence.

NINTH

In furtherance, and not in limitation of the powers conferred by statute, the board of directors is expressly authorized:

Subject to the bylaws, if any, adopted by the stockholders, to make, alter, amend or repeal the bylaws of the corporation.

To fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and cause to be executed mortgages and liens upon the real and personal property of this corporation.

To authorize the guaranty by the corporation of the securities, evidences of indebtedness and obligations of other person, corporations or business entities.

To set apart out of any funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve.

By resolution passed by a majority of the whole board, to designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the corporation, which, to the extent provided in the resolution or in the bylaws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which require it. Such committee or committees shall have such name or names as may be stated in the bylaws of the corporation or as may be determined from time to time by resolution adopted by the board of directors.

When and as authorized by the affirmative vote of stockholders holding stock entitling them to exercise at least a majority of the voting power given at a stockholders’ meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the board of directors shall have power and authority at any meeting to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of directors deem expedient and for the best interests of the corporation.

All the corporate powers of the corporation shall be exercised by the board of directors except as otherwise herein or in the bylaws or by law.

3 -

TENTH

Meeting of stockholders may be held outside the State of Nevada, if the bylaws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Nevada at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation.

ELEVENTH

This corporation reserves the right to amend alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation and all rights conferred upon stockholders herein are granted subject to this reservation.

TWELFTH

The corporation shall indemnify its officers, directors, employees and agents to the full extent permitted by the laws of the State of Nevada.

A director or officer of the corporation shall not be personally liable to the corporation or its stockholders for damages for breach of fiduciary duty as a director or officer, but this article shall not eliminate or limit the liability of a director or officer for (i) acts or omissions which involve intentional misconduct, fraud or a knowing violation of the law or (ii) the unlawful payment of dividends. Any repeal or modification of this article by stockholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the corporation for acts or omissions prior to such repeal or modification.

THIRTEENTH

Every person who was or is a party to, or is threatened to be made a party to, or is involved in any such action, suit or proceeding, whether civil. criminal, administrative or investigative, by the reason of the fact that he or she, or a person with whom he or she is a legal representative, is or was a director of the corporation, or who is serving at the request of the corporation as a director or officer of another corporation, or is a representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines, and amounts paid or to be paid in a settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil suit or proceeding must be paid by the corporation as incurred and in advance of the final disposition of the action suit, or proceeding, under receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the corporation. Such right of indemnification shall not be exclusive of any other right of such directors, officers or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law, or otherwise, as well as their rights under this article.

Without limiting the application of the foregoing, the board of directors may adopt by-laws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the corporation to purchase or maintain insurance on behalf of any person who is or was a director or officer.

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I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying that the facts herein stated are true, and accordingly have hereunto set my hand this 12^th day of August, 2002.

/s/ IVAN BEBEK

IVAN BEBEK

Incorporator

CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT:

I, Nevada Agency and Trust Company, hereby accept appointment as Resident Agent for the above named corporation, this 19th day of August, 2003.

/s/ Amanda Cardinalli

Authorized Signature of

Resident Agent Company

Amanda Cardinalli, President

for Nevada Agency and Trust Company

EX-3.2

Exhibit 3.2

BYLAWS OF

ZONED PROPERTIES, INC.

As of October 1, 2014

1. OFFICES & AGENT

Section 1.01. Registered Office and Agent. The Corporation shall have and continuously maintain a registered office and registered agent in accordance with the office of the Secretary of State of the State of Nevada.

Section 1.02 Other Offices. The Corporation may have offices at such place or places within or without the State of Nevada as the Board of Directors may from time to time appoint or the business of the Corporation may require or make desirable.

2. SHAREHOLDERS’ MEETINGS

Section 2.01. Place of Meetings. All meetings of the shareholders shall be held at a place or in a manner as may be fixed from time to time by the Board of Directors.

Section 2.02. Annual Meetings. An annual meeting of the shareholders shall be held at such date and time as may be fixed by resolution of the Board of Directors for the purpose of electing Directors and transacting such other business as may properly be brought before the meeting.

Section 2.03. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by the State of Nevada or the Certificate of Incorporation, may be called by the Chairman of the Board (the “Chairman”) or the Corporation’s Chief Executive Officer; and shall be called by the Chairman or the Secretary: (i) when so directed by the Board of Directors, or (ii) at the written request of shareholders owning shares representing at least twenty-five percent of voting power of the Corporation in the election of Directors. A request for a special meeting shall state the purpose or purposes of the proposed meeting.

Section 2.04. Notice of Meetings. Except as otherwise required or permitted by the State of Nevada or the Certificate of Incorporation, written notice of each meeting of the shareholders, whether annual or special, shall be served either personally, by mail or electronic transmission, upon each shareholder of record entitled to vote at such meeting, not less than 10 nor more than 60 days before such meeting. If mailed or sent by electronic transmission, such notice shall be directed to a shareholder at the shareholder’s post office address or electronic address last shown on the records of the Corporation. Notice of any special meeting of shareholders shall state the purpose or purposes for which the meeting is called. Notice of any meeting of shareholders shall not be required to be given to any shareholder who, in person or by his attorney thereunto authorized, either before or after such meeting, shall waive such notice by means of a signed writing. Attendance of a shareholder at a meeting, either in person or by proxy, shall of itself constitute waiver of notice and waiver of any and all objections to the place of the meeting, the time of the meeting, and the manner in which it has been called or convened, except when a shareholder attends a meeting solely for the purpose of stating, at the beginning of the meeting, any such objection or objections to the transaction of business. Notice of any adjourned meeting need not be given otherwise than by announcement at the meeting at which the adjournment is taken.

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Section 2.05. Quorum. Shareholders owning shares entitling them to exercise at least one third of the voting power in the election of directors shall constitute a quorum at any meeting of the shareholders for the transaction of business, except as otherwise provided by the State of Nevada, by the Certificate of Incorporation, or by these Bylaws. If, however, the required number shall not be present or represented at any meeting of the shareholders, the shareholders present and entitled to vote shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. At any adjourned meeting at which a quorum is present any business may be transacted that might have been transacted at the meeting as originally called.

Section 2.06. Voting. If a quorum exists, action on a matter by the shareholders (other than the election of Directors) is approved if the votes cast by the holders of the shares represented at the meeting and entitled to vote on the subject matter favoring the action exceed the votes cast opposing the action (with ‘abstentions’ and ‘broker non-votes’ not counted as a vote cast with respect to that matter), unless a greater number of affirmative votes is required by the Certificate of Incorporation or is mandatory under the State of Nevada. Unless otherwise provided in the Certificate of Incorporation, Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present (with ‘abstentions’ and ‘broker non-votes’ not counted as a vote cast with respect to that director).

Section 2.07. Conduct of Meetings. The Chairman of the Board of Directors, or in his absence the Chief Executive Officer, or in their absence a person appointed by the Board of Directors, shall preside at meetings of the shareholders. The Secretary of the Corporation, or in the Secretary's absence, any person appointed by the individual presiding at the meeting shall act as Secretary for meetings of the shareholders. Meetings shall be governed by procedures prescribed by the person presiding at the meeting or by the Board so long as they are not inconsistent with these Bylaws.

Section 2.08. Written Consents. Any action required or permitted to be taken at a meeting of the shareholders of the Corporation may be taken without a meeting if written consent, setting forth the action so taken, shall be signed by persons who would be entitled to vote at a meeting with the voting power necessary to authorize or take such action at a meeting at which all shares entitled to vote were present and voted.

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Section 2.09. Shareholder Nominees for Directors. Any shareholder holding shares entitled to vote in the election of directors with an aggregate value of at least $10,000 may nominate one or more directors if the shareholder gives written notice to the corporate secretary and the notice is received not less than 60 days nor more than 90 days prior to the dater of the shareholder meeting; except that, if the Corporation gives less than 75 days’ notice of the meeting date or if public disclosure of the date of the meeting is made less than 75 days before the meeting, the notice must be received not later than the close of business on the 10th day following the day on which notice of the date of the meeting was mailed or public disclosure was made, whichever first occurs. The notice must set forth: (i) the name and address of the shareholder making the nomination; (ii) the name, age, principal occupation or employment, business address and residence address of each person to be nominated; (iii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such shareholder or any person directly or indirectly controlling, controlled by, under common control with or acting in concert with such shareholder (a “Shareholder Associated Person”), and by each person to be nominated as of the record date for the meeting and as of the date of such notice; (iv) a description of all contracts, arrangements, understandings or relationships between (a) the shareholder making the nomination and any Shareholder Associated Person that relate to the nomination, (b) the shareholder making the nomination and the proposed nominee and (c) the shareholder making the nomination, the proposed nominee or any Shareholder Associated Person and any other person or persons that relate to the nomination; (v) such other information regarding each nominee that would be required to be disclosed in a proxy statement; and (vi) the consent of each nominee to serve as a director of the corporation if elected and that nominee’s representation that the nominee is qualified under section 3.06 of the Bylaws of the Corporation.

Section 2.10. Shareholder Proposals. Any shareholder holding shares entitled to vote in the election of directors with an aggregate value of at least $10,000 may present a proposal at a meeting of the shareholder of the Corporation if the shareholder gives written notice to the corporate secretary and the notice is received not less than 60 days nor more than 90 days prior to the dater of the shareholder meeting; except that if the Corporation gives less than 75 days’ notice of the meeting date or if public disclosure of the date of the meeting is made less than 75 days before the meeting, the notice must be received not later than the close of business on the 10th day following the day on which notice of the date of the meeting was mailed or public disclosure was made, whichever first occurs. Each notice must set forth as to each matter the shareholder proposes to bring before the meeting: (i) a description of each proposed item of business and the reasons for conducting that business at the annual meeting; (ii) any material interest in that business of that shareholder or any Shareholder Associated Person, including any anticipated benefit to the shareholder or any Shareholder Associated Person; (iii) the name and record address of the shareholder proposing to bring that item of business before the meeting; (iv) the class and number of shares of stock held of record, owned beneficially and represented by proxy by that shareholder or any Shareholder Associated Person as of the record date for the meeting and as of the date of the notice; (v) whether and the extent to which any derivative instrument, hedging or other transaction or transactions has been entered into by or on behalf of, or any other agreement or understanding has been made to increase or decrease economic interest in the corporation’s stock or manage the risk or benefit of share price changes for, or to increase or decrease the voting power of, that shareholder or any Shareholder Associated Persons with respect to the corporation’s stock; (vi) a description of all contracts, arrangements, understandings or relationships between that shareholder and any Shareholder Associated Persons or between that shareholder or any Shareholder Associated Persons and any other person or persons that relate to the proposal of that business by that shareholder; and (vii) all other information which would be required to be included in a proxy statement.

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3. BOARD OF DIRECTORS

Section 3.01. Authority. The property and business of the Corporation shall be managed by its Board of Directors. In addition to the powers and authority expressly conferred by these Bylaws, the Board of Directors may exercise all powers of the Corporation and do all such lawful acts and things as are not by the State of Nevada, by the Certificate of Incorporation, or by these Bylaws directed or required to be exercised or done by the shareholders.

Section 3.02. Number and Term. The Board of Directors shall consist of a set number of members to be fixed by a resolution of the Board of Directors from time to time. Except as provided in the Certificate of Incorporation, each Director (whether elected at an annual meeting of shareholders or otherwise) shall hold office for a period of one (1) year with an option for reelection or until the annual meeting of shareholders held next after this election, and until a successor shall be elected and qualified, or until his earlier death, resignation, incapacity to serve, or removal. Directors need not be shareholders.

Section 3.03. Vacancies. A vacancy on the Board of Directors shall exist upon the death, resignation, removal, or incapacity to serve of any Director; upon the increase in the number of authorized Directors; and upon the failure of the shareholders to elect the full number of Directors authorized. During a vacancy or vacancies, the remaining Directors shall continue to act. Except as required by the Certificate of Incorporation, vacancies may be filled by the Directors, at any meeting held during the existence of such vacancy. Any Director appointed by the Board of Directors to fill a vacancy, shall serve as a Director as per Section 3.02 of these Bylaws.

Section 3.04. Place of Meetings. The Board of Directors may hold its meetings at any place or places within or without the State of Nevada or by remote communication.

Section 3.05. Compensation of Directors. Directors may be allowed such compensation for attendance at regular or special meetings of the Board of Directors and of any special or standing committees of the Board of Directors as may from time to time be determined by the Board of Directors. Compensation may also be addressed as per a Board Member Agreement if such document has been authorized and executed.

Section 3.06. Qualifications. No person shall qualify for service as a Director if he or she is a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, or has received any such compensation or other payment from any person or entity other than the Corporation, in each case in connection with candidacy or service as a director of the Corporation. Agreements providing only for indemnification and/or reimbursement of out-of-pocket expenses in connection with candidacy as a director (but not, for the avoidance of doubt, in connection with service as a director) and any pre-existing employment agreement a candidate has with his or her employer (not entered into in contemplation of the employer's investment in the Corporation or such employee's candidacy as a director), shall not be disqualifying under this bylaw.

Section 3.07. Resignation. Any Director may resign by giving written notice to the Board of Directors. The resignation shall be effective on receipt, unless the notice specifies a later time for the effective date. If the resignation is effective at a future time, a successor may be elected before that time to take office when the resignation becomes effective.

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Section 3.08. Removal. Except as stated in the Certificate of Incorporation, the Shareholders may declare the position of a Director vacant, and may remove such Director for cause if the Director has been declared of unsound mind by a final order of court; the Director has been convicted of a felony; the Director has failed to attend at least 75% of the meetings of the Board during a twelve month period or the Director has been presented with one or more written charges, has been given at least ten days' notice of a hearing at which he may have legal counsel present, and has been given opportunity for such a hearing at a meeting of the Shareholders. Except as stated in the Certificate of Incorporation, the Shareholders may also declare the position of a Director vacant, and may remove such Director without cause, by a majority vote cast by the shares entitled to vote at a meeting at which a quorum is present.

Section 3.09. Notice of Meetings. Regular meetings of the Board of Directors may be held at such time and place within or without the State of Nevada as shall from time to time be determined by the Board of Directors by resolution, and that resolution, without more, will constitute notice

Section 3.10. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board or the Chief Executive Officer on not less than one day’s notice by mail, electronic transmission or personal delivery to each Director and shall be called by the Chairman of the Board, the Chief Executive Officer, or the Secretary in like manner and on like notice on the written request of any four or more Directors.

Section 3.11. Notice - Purpose of Meeting. No notice of any special meeting of the Board of Directors need state the purposes for the meeting, and notice is sufficient if it states the time and place or manner of participating in the meeting and the person or persons calling such meeting.

Section 3.12. Quorum. At all meetings of the Board of Directors, the presence of a majority of the Directors then serving shall be necessary and sufficient to constitute a quorum for the transaction of business. The act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically required by the State of Nevada, by the Certificate of Incorporation or by these Bylaws. In the absence of a quorum, a majority of the Directors present at any meeting may adjourn the meeting from time to time until a quorum is present. Notice of any adjourned meeting need only be given by announcement at the meeting at which the adjournment is taken.

Section 3.13. Telephonic Participation. Directors may participate in meetings of the Board of Directors through use of conference telephone or other remote communications equipment, so long as all Directors participating in the meeting can hear and speak to each other. Such participation is equivalent to personal presence at the meeting.

Section 3.14. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent is signed by all members of the Board or of such committee, as the case may be, and the written consent is filed with the Secretary of the Corporation.

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4. COMMITTEES OF THE BOARD

Section 4.01. Executive Committee. The Board of Directors may, by resolution adopted by a majority of the entire Board, designate an Executive Committee of three or more Directors. Each member of the Executive Committee shall hold office until the first meeting of the Board of Directors after the annual meeting of the shareholders next following his election and until his successor member of the Executive Committee is elected, or until his death, resignation, removal, or until he shall cease to be a Director.

Section 4.02. Executive Committee - Powers. During the intervals between the meetings of the Board of Directors, the Executive Committee may exercise all the powers of the Board of Directors in the management of the business affairs of the Corporation, including all powers specifically granted to the Board of Directors by these Bylaws or by the Certificate of Incorporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that the Executive Committee shall not have the power to amend or repeal any resolution of the Board of Directors that by its terms does not provide for amendment or repeal by the Executive Committee, and the Executive Committee shall not have the authority of the Board of Directors in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the State of Nevada to be submitted to stockholders for approval or (ii) adopting, amending or repealing any of these Bylaws.

Section 4.03. Executive Committee - Meetings. The Executive Committee shall meet from time to time on call of the Chairman of the Board, the Chief Executive Officer, or of any two or more members of the Executive Committee. Meetings of the Executive Committee may be held at such place or places, within or without the State of Nevada, as the Executive Committee shall determine or as may be specified or fixed in the respective notices of such meetings. The Executive Committee may fix its own rules of procedure, including provision for notice of its meetings, shall keep a record of its proceedings, and shall report these proceedings to the Board of Directors at the meeting thereof held next after such meeting of the Executive Committee. All such proceedings shall be subject to revision or alteration by the Board of Directors except to the extent that action shall have been taken pursuant to or in reliance upon such proceedings prior to any such revision or alteration. The Executive Committee shall act by majority vote of its members.

Section 4.04. Executive Committee - Alternate Members. The Board of Directors, by resolution adopted in accordance with Section 4.01, may designate one or more Directors as alternate members of the Executive Committee, who may act in the place and stead of any absent member or members at any meeting of such committee.

Section 4.05. Other Committees. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate one or more additional committees, each committee to consist of one or more of the Directors of the Corporation, which shall have such name or names and shall have and may exercise such powers of the Board of Directors in the management of the business and affairs of the Corporation, except the powers denied to the Executive Committee, as may be determined from time to time by the Board of Directors.

Section 4.06. Removal of Committee Members. The Board of Directors shall have power at any time to remove any or all of the members of any committee, with or without cause, and to fill vacancies in and to dissolve any committee.

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5. OFFICERS

Section 5.01. Election of Officers. The Board of Directors, at its first meeting after each annual meeting of shareholders, shall elect a Chief Executive Officer and may elect such other Officers as it shall deem necessary who shall hold their offices for such terms as shall be determined by the Board of Directors, and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors or the Chairman of the Board.

Section 5.02. Compensation. The salaries of the Officers of the Corporation shall be fixed by the Board of Directors, except that the Board of Directors may delegate to any Officer or Officers the power to fix the compensation of any Officer. In the absence of any such designation, the Chief Executive Officer and/or President shall have authorization to fix compensation for employees and contractors of the Corporation.

Section 5.03. Term. Removal. Resignation. Each Officer of the Corporation shall hold office until his successor is chosen or until his earlier resignation, death, removal, or termination of his office. Any Officer may be removed with cause by a majority vote of the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby. Any Officer may resign by giving written notice to the Board of Directors. The resignation shall be effective upon receipt, or at such time as may be specified in such notice.

Section 5.04. Chairman of the Board. The Chairman of the Board shall be the Chief Executive Officer of the Corporation and shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall be ex officio a member of all standing committees, unless otherwise provided in the resolution appointing the same. The Chairman of the Board shall determine the meeting agenda, call meetings of the shareholders, the Board of Directors, and the Executive Committee to order and shall act as chairman of such meetings.

Section 5.05. Chief Executive Officer. When no Chairman of the Board has been elected, or if a Chairman has been elected and not declared to be the Chief Executive Officer, or in the event of the death or disability of the Chairman of the Board or at his request, the Chief Executive Officer (if such an officer is appointed) shall have all of the powers and perform the duties of the Chairman of the Board. The Chief Executive Officer shall also have such powers and perform such duties as are specifically imposed upon him by law and as may be assigned to him by the Board of Directors or the Chairman of the Board. In the absence of a Chairman of the Board serving as Chief Executive Officer, the Chief Executive Officer shall determine the meeting agenda, call meetings of the shareholders, the Board of Directors, and the Executive Committee to order and shall act as chairman of such meetings. If no other Officers are elected, the Chief Executive Officer shall also have all of the powers and perform the duties of Secretary and Treasurer. The Chief Executive Officer shall retain the authority to elect Officers as required.

Section 5.06. Secretary. The Secretary shall attend all meetings of the Board of Directors, all meetings of the shareholders, and record all votes and the minutes of all proceedings in books to be kept for that purpose, and shall perform like duties for the standing committees when required. He shall give, or cause to be given, any notice required to be given of any meetings of the shareholders and of the Board of Directors. The Assistant Secretary or Assistant Secretaries shall, in the absence or disability of the Secretary, or at the Secretary's request, perform the duties and exercise the powers and authority granted to the Secretary.

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Section 5.07. Treasurer. The Treasurer shall have charge and be responsible for all funds, securities, receipts, and disbursements of the Corporation; he shall render to the Chairman of the Board, the Chief Executive Officer, and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation, and in general, he shall perform all the duties incident to the office of a treasurer of a Corporation, and such other duties as may be assigned to him by the Chairman of the Board, or the Chief Executive Officer.

Section 5.08. Duties. Except as otherwise provided in this Article 5, the corporate officers of the Corporation elected to office by the Board of Directors or Chief Executive Officer shall have such powers and perform such duties incident to each of their respective offices and such other duties as may from time to time be conferred upon or assigned to them by the Board of Directors.

6. CAPITAL STOCK

Section 6.01. Share Certificates. Unless the Certificate of Incorporation otherwise provides, or unless the Board of Directors provides by resolution or resolutions that some or all of the shares of any class or classes, or series thereof, of the Corporation’s capital stock shall be certificated, the Corporation shall not issue certificates to evidence shares of stock in the Corporation. If under the preceding sentence shares of any class or classes of the Corporation’s capital stock are to be certificated, the interest of each shareholder shall be evidenced by a certificate or certificates representing shares of stock of the Corporation in such form as the Board of Directors may from time to time adopt. The certificates shall be consecutively numbered, and the issuance of shares shall be duly recorded in the books of the Corporation as they are issued. Each certificate shall indicate the holder's name, the number of shares, the class of shares and series, if any, represented thereby, a statement that the Corporation is organized under the laws of the State of Nevada, and the par value of each share or a statement that the shares are without par value. Each certificate shall be signed by (i) the Chairman of the Board, the Chief Executive Officer, or the President (if any) and (ii) the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, if such officer or officers have been elected or appointed by the Corporation, and shall be sealed with the seal of the Corporation; except that if such certificate is signed by a transfer agent, or by a transfer clerk acting on behalf of the Corporation, and a registrar, the signature of any Officer of the Corporation, whether because of death, resignation, or otherwise, prior to the delivery of such share certificate by the Corporation, such certificate may nevertheless be delivered as though the person who signed whose facsimile signatures shall have been used thereon had not ceased to be such Officer or Officers.

Section 6.02. Fractional Shares. The Corporation may, but shall not be required to, issue fractional shares of its capital stock if necessary or appropriate to effect authorized transactions. If the Corporation does not issue fractional shares, it shall (i) arrange for the disposition of fractional interests on behalf of those that otherwise would be entitled thereto, (ii) pay in cash the fair value of fractions of a share as of the time when those who otherwise would be entitled to receive such fractions are determined, or (iii) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or in bearer form (represented by a certificate), which scrip or warrants shall entitle the holder to receive a full share upon surrender of such scrip or warrants aggregating a full share. Fractional shares shall, but scrip or warrants for fractional shares shall not (unless otherwise expressly provided therein), entitle the holder to exercise voting rights, to receive dividends thereon, to participate in the distribution of any assets in the event of liquidation, and otherwise to exercise rights as a holder of capital stock of the class or series to which such fractional shares belong.

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Section 6.03. Shareholder Records. The names and addresses of the holders of record of the shares of each class and series of the Corporation’s capital stock, together with the number of shares of each class and series held by each record holder, shall be entered on the books of the Corporation. Except as otherwise required by the State of Nevada, or other applicable law, the Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares of capital stock of the Corporation as the person entitled to exercise the rights of a stockholder, including, without limitation, the right to receive any dividends or any other distributions and to vote in person or by proxy at any meeting of the stockholders of the Corporation. The Corporation shall not be bound to recognize any equitable or other claim to or interest in any such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly required by the State of Nevada or other applicable law.

Section 6.04. Determination of Shareholders.

(a) For the purpose of determining shareholders entitled to notice of or to vote at any meetings of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that stock transfer books shall be closed for a stated period not to exceed sixty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting.

(b) In lieu of closing stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date to be not more than sixty days and, in case of a meeting of shareholders, not less than ten days, prior to the date on which the particular action requiring such determination of shareholders is to be taken.

Section 6.06. Transfer Agent. The Board of Directors may appoint one or more transfer agents and one or more registrars and may require each stock certificate to bear the signature or signatures of a transfer agent or a registrar or both.

Section 6.07. Replacement Certificates. Any person claiming a certificate of stock to be lost, stolen, or destroyed shall make an affidavit or affirmation of the fact in such manner as the Board of Directors may require and shall, if the Directors so require, give the Corporation a bond of indemnity. Such bond shall be in form and amount satisfactory to the Board of Directors, and shall be with one or more sureties, whereupon an appropriate new certificate may be issued in lieu of the one alleged to have been lost, stolen or destroyed.

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7. MISCELLANEOUS

Section 7.01. Inspection of Books. The Board of Directors shall have power to determine which accounts and books of the Corporation, if any, shall be open to the inspection of the shareholders, except with respect to such accounts, books, and records as may by law be specifically open to inspection by the shareholders, and shall have power to fix reasonable rules and regulations not in conflict with the applicable law, if any, for the inspection of records, accounts, and books which by law or by determination of the Board of Directors shall be open to inspection, and the shareholders' rights to this respect are and shall be restricted and limited accordingly.

Section 7.02. Fiscal Year. The fiscal year of the Corporation shall be fixed from time to time by resolution of the Board of Directors.

Section 7.03. Seal. If required, the signature of the Corporation followed by the word "SEAL" or "CORPORATE SEAL" enclosed in parenthesis or scroll, shall be deemed to be the seal of the Corporation.

Section 7.04. Appointment of Agents. The Chairman of the Board, the Chief Executive Officer, or the Secretary shall be authorized and empowered in the name of and as the act and deed of the Corporation to name and appoint general and special agents, representatives, and attorneys to represent the Corporation in the United States or in any foreign country or countries; to name and appoint attorneys and proxies to vote any shares of stock in any other Corporation at any time owned or held of record by the Corporation; to prescribe, limit, and define the powers and duties of such agents, representatives, attorneys, and proxies; and to make substitution, revocation, or cancellation in whole or in part of any power or authority conferred on any such agent, representative, attorney, or proxy. All powers of attorney or other instruments under which such agents, representatives, attorneys, or proxies shall be so named and appointed shall be signed and executed by the Chairman of the Board, the Chief Executive Officer, or the Secretary, and the corporate seal shall be affixed thereto. Any substitution, revocation, or cancellation shall be signed in like manner, provided always that any agent, representative, attorney, or proxy, when so authorized by the instrument appointing him, may substitute or delegate his powers in whole or in part and revoke and cancel such substitutions or delegations. No special authorization by the Board of Directors shall be necessary in connection with the foregoing, but this Bylaw shall be deemed to constitute full and complete authority to the Officers above designated to do all the acts and things as they deem necessary or incidental thereto or in connection therewith.

8. AMENDMENTS

Section 8.01. Amendment. The Bylaws of the Corporation may be altered or amended and new Bylaws may be adopted by the shareholders at any annual or special meeting of the shareholders or by the Board of Directors at any regular or special meeting of the Board of Directors; except that, if such action is to be taken at a meeting of the shareholders, notice of the general nature of the proposed change in the Bylaws shall have been given in the notice of the meeting. Amendments may also be adopted by the Board of Directors without a meeting if a written consent is signed by all members of the Board or of such committee.

Zoned Properties 10 October 1, 2014

EX-5.1

Exhibit 5.1

LEGAL & COMPLIANCE, LLC

LAURA ANTHONY, ESQUIRE LAZARUS ROTHSTEIN, ESQUIRE CHAD FRIEND, ESQUIRE MICHAEL RASMUSSEN, ESQUIRE _______________ OF COUNSEL: PETER P. LINDLEY, ESQUIRE, CPA STUART REED, ESQUIRE MARC S. WOOLF, ESQUIRE WWW.LEGALANDCOMPLIANCE.COM WWW.SECURITIES-LAW-BLOG.COM

DIRECT E-MAIL: LANTHONY@LEGALANDCOMPLIANCE.COM

_____________, 2015

Zoned Properties, Inc.

14300 N. Northsight Blvd., #208

Scottsdale, AZ 85260

Re: Zoned Properties, Inc. Registration Statement on Form S-1

Gentlemen:

You have requested our opinion, as counsel for Zoned Properties, Inc., a Nevada corporation (the “Company”), in connection with the registration under the Securities Act of 1933, as amended (the “Act”), of 1,351,915 shares of Common Stock (the “Registered Shares”) for resale by certain selling shareholders (collectively, the “Selling Shareholders”) named in the Company’s Registration Statement on Form S-1 (the “Registration Statement”).

We have examined originals or certified copies of such corporate records of the Company and other certificates and documents of officials of the Company, public officials and others as we have deemed appropriate for purposes of this letter. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all copies submitted to us as conformed and certified or reproduced copies.

Subject to and in reliance upon the foregoing, we are of the opinion that the Registered Shares have been validly authorized and are validly issued, fully paid and non-assessable.

We express no opinion with regard to the applicability or effect of the law of any jurisdiction other than, as in effect on the date of this letter, (a) the internal laws of the State of Nevada; and (b) the federal laws of the United States.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the Registration Statement. In so doing, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder.

Legal & Compliance, LLC

By:
	Laura Anthony, Esq.

330 CLEMATIS STREET, #217 ● WEST PALM BEACH, FLORIDA ● 33401 ● PHONE: 561-514-0936 ● FAX 561-514-0832

EX-10.1

Exhibit 10.1

Employment Agreement

THIS EMPLOYMENT AGREEMENT ("Agreement") is made effective the 31st day of July, 2014, by and between Zoned Properties, Inc., a Nevada corporation ("Employer"), and Bryan McLaren, an individual ("McLaren").

Premises

WHEREAS, the Employer desires to secure the services of Mr. McLaren pursuant to the terms and conditions of an employment agreement; and

WHEREAS, Mr. McLaren has the requisite skills and experience in providing services to corporations in businesses similar to the Employer and desires to enter into a written agreement to serve as Chief Executive Officer of Employer.

Agreement

NOW THEREFORE, with the above provisions incorporated herein by this reference, in consideration of the mutual promises contained herein, the benefits to be derived by each party hereunder and other good and valuable consideration, the sufficiency of which is hereby expressly acknowledged, the parties hereto mutually agree as follows:

1.     Employment. The Employer employs Mr. McLaren and Mr. McLaren accepts employment as Chief Executive Officer of Employer upon the terms and conditions set forth in this Agreement.

2.     Term. The term of this Agreement shall commence July 31, 2014, and shall continue for an initial term of ten (10) years. This Agreement may be renewed at the end of the term for an additional term upon mutual agreement of the parties hereto. If there is no agreed upon additional term, then the employment will continue on a month to month basis subject to termination by either party upon ninety (90) days written notice to the other party.

3.Compensation. Employer agrees to compensate Mr. McLaren in an amount equal to an annual salary of $120,000 for his services, payable bi-weekly throughout the initial term. Compensation will increase commensurate with increased experience specifically including a raise at the completion of each additional graduate degree; $15,000 annual salary increase upon the completion of an Executive Masters and an additional $15,000 annual salary increase upon the completion of a Master of Business Administration (MBA). Mr. McLaren may also, at his discretion, receive stock options up to 25,000 shares per year of completed service. The Employer may also choose to award Mr. McLaren with an annual bonus at the discretion of the Board of Directors.

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4.     Securities Compliance

a) Mr. McLaren understands that Employer will not register any Compensation Shares under the Securities Act of 1933, as amended ("Securities Act") or any state securities law, but will instead issue the Compensation Shares in reliance upon exemptions from the registration and prospectus delivery requirements for transactions not involving a public offering. Mr. McLaren further understands that the Compensation Shares will therefore be “restricted securities” within the meaning of the Securities Act and Rule 144 promulgated under the Securities Act (“Rule 144”). Mr. McLaren represents that he is fully aware of the limitations on the resale of restricted securities set forth in Rule 144. Mr. McLaren acknowledges that if Rule 144 is available, Mr. McLaren may make only routine sales of the Compensation Shares and in limited amounts, in accordance with Rule 144. If Rule 144 is not available, Employer may refuse to transfer the Compensation Shares unless Mr. McLaren or Mr. McLaren’s transferee furnishes Employer with either: i) a "no action" letter from the Securities and Exchange Commission; ii) an opinion of counsel that the transfer is proper; or iii) establishes, to Employer's satisfaction, than an exemption from registration is available. Employer's registrar and transfer agent will maintain a stop transfer order against the Compensation Shares. All certificates representing the Compensation Shares, and any and all certificates issued in replacement thereof or in exchange therefor, shall bear a legend, in substantially the following form, which Mr. McLaren has read and understands:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"), AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF EMPLOYER."

b) In order to provide documentation for Employer's reliance upon exemptions from registration and prospectus delivery requirements for issuance of the Compensation Shares, Mr. McLaren represents and warrants:

i. Mr. McLaren will acquire the Compensation Shares for investment purposes only and not with a view to public resale or distribution.

ii. Mr. McLaren will not sell, transfer or otherwise dispose of the Compensation Shares for value except in compliance with the Securities Act and the rules promulgated thereunder.

iii. Mr. McLaren’s knowledge and experience in financial and business matters in general, and investments in particular, are such that Mr. McLaren is capable of evaluating the merits of acquiring the Compensation Shares.

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iv. Mr. McLaren understands the speculative nature of the Compensation Shares and the possibility of loss and is capable of bearing the economic risks of receiving the Compensation Shares.

v. Mr. McLaren has had an opportunity to ask questions of and obtain answers from Employer's representatives concerning the financial status of Employer and the Compensation Shares. Mr. McLaren has also had the opportunity to examine such of Employer's disclosure documents that Mr. McLaren believes are necessary to make an economic decision to accept the Compensation Shares.

5.     Duties; Termination. During the term of this Agreement, Mr. McLaren will serve as the Chief Executive Officer of the Employer and shall perform the tasks and have the rights, powers and obligations normally associated with the office of Chief Executive Officer. In particular, Mr. McLaren shall advise Employer as to the operational management and strategic development of Employer’s Organization in Arizona, and in such other states as Employer shall request. Mr. McLaren agrees to serve in such position with Employer at the pleasure of the Employer’s board of directors ("Board of Directors") and to perform such tasks as the Board of Directors shall reasonably request. Mr. McLaren and Employer agree that Mr. McLaren’s employment may be terminated with just cause by the Board of Directors. Termination will also be subject to the Golden Parachute Agreement included as Appendix A.

6.     Extent of Services/Conduct/Non-Compete Agreement. Mr. McLaren may perform services for other organizations and volunteer for one or more charitable organizations provided that, in the reasonable judgment of the Board of Directors, such services do not interfere with and are not inconsistent with Mr. McLaren’s duties and obligations under this Agreement. In addition, during the term of this Agreement and for a period of six months following the termination of this Agreement, Mr. McLaren hereby agrees not to solicit or contact in any manner that could be reasonably construed as a solicitation, any past or current customer or primary vendor of Employer for purposes of encouraging such customer to refrain from purchasing products or services from Employer or for purposes of encouraging such vendor to refrain from providing services or selling products to Employer.

7.     Expenses. Mr. McLaren may incur reasonable expenses for promoting the Employer's business, including reasonable expenses for entertainment, travel, and similar items. The Employer will reimburse Mr. McLaren for all such expenses upon Mr. McLaren’s periodic presentation of an itemized account of such expenditures.

8.     Termination Upon Sale of Business. Employer may terminate this Agreement upon ninety (90) days written notice to Mr. McLaren upon the happening of any of the following events:

a) The sale, by the Employer, of substantially all of its assets to a single purchaser or group of associated purchasers;

b) The sale, exchange, or other disposition to a single entity or group of entities under common control in one transaction or series of related transactions of greater than fifty percent (50%) of the outstanding shares of the Employer's common stock;

c) A decision by Employer to terminate its business and liquidate its assets; or

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d) The merger or consolidation of the Employer in a transaction in which the shareholders of the Employer receive less than fifty percent (50%) of the outstanding voting shares of the new or surviving corporation.

In the event of such termination, the remaining unpaid Compensation Shares shall be due and payable immediately to Mr. McLaren or his designated agents; and all provisions of the Golden Parachute Agreement as written in Appendix A shall be in full effect.

9.     Death During Employment. If Mr. McLaren dies during the term of this Agreement, then the Employer shall pay to the designated beneficiary of Mr. McLaren the compensation, which would otherwise be payable to Mr. McLaren up to the end of the month in which such death occurs and this Agreement shall be terminated. If Mr. McLaren has made no beneficiary designation, then the compensation due hereunder shall be paid to Mr. McLaren’s estate.

10.    Mr. McLaren Not Restricted by Other Agreement. Mr. McLaren hereby expressly represents, warrants, and covenants to the Employer that he is not bound, in any manner, by any agreement, whether written or oral, which would restrict him from performing any duties under this Agreement.

11.    Superseding Agreement. Mr. McLaren and the Employer agree that this agreement will supersede any other employment contract(s) already in place.

12.    Survival. The provisions of this Agreement, and, in particular, the provisions of Section 6 hereof, shall survive the termination of this Agreement.

13.    Indemnification. Employer shall hold harmless, defend, and indemnify Mr. McLaren from all claims, demands, or causes of action brought, at any time, against Mr. McLaren as a result of any of the following circumstances: (a) Mr. McLaren’s providing services to Employer; (b) any action or inaction arising from or relating to Mr. McLaren’s position as An Officer of Employer; or (c) any action taken or which should have been taken in the course and scope of Mr. McLaren’s employment with Employer, or which arose from or related to such employment, including all costs for any judgment, settlement, attorney fees, legal defense, and other expenses related to same.

14.    Entire Agreement. This Agreement constitutes the entire understanding between the parties and there are no covenants, conditions, representations, or agreements, oral or written, or any nature whatsoever, other than those herein continued.

15.    Amendments. No amendment, alteration, or modification of this Agreement shall be binding upon the parties hereto unless said amendment, alteration, or modification is in writing and signed by all parties.

16.    Waiver. The waiver of any term, condition, clause, or provision of this Agreement shall in no way be deemed or considered a waiver of any other term, condition, clause, or provision of this Agreement.

17.    Severability. If any term, condition, clause, or provision of this Agreement shall be deemed to be void or invalid then that term, condition, clause, or provision shall be stricken from this Agreement to the extent it is held to be void or invalid, and in all other respects this Agreement shall be valid and in full force and operation.

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18.    Notices. Any notice or other communication required or permitted hereunder shall be sent by United States certified mail, postage prepaid, addressed:

if to the Employer:

Zoned Properties, Inc.

16624 N. 90th Street, Suite 101
Scottsdale, AZ 85260

and, if to Mr. McLaren:

Bryan McLaren

5568 E. Sheena Dr.

Scottsdale, AZ 85254

or to such other person or address designated by the parties to receive notice. The date of the notice shall be the date of the mailing.

19.    Additional Documents. The parties hereto agree to execute any and all additional papers and documents reasonably necessary or appropriate to effectuate the terms of this Agreement.

20.    Governing Law. This Agreement shall be subject to and governed by the laws of the State of Nevada and Arizona. Any legal action hereunder shall be properly commenced in a federal or state court of competent jurisdiction in Nevada or Arizona. The prevailing party in any such action shall be entitled to recover, in addition to any relief or award ordered by the court, a reasonable attorney fee and all costs of court.

21.    Assignment. This Agreement shall not be assignable by any party to this Agreement, except upon the written consent of all parties hereto. Mr. McLaren shall not have the right to pledge, encumber, or dispose of the right to receive any payments under this Agreement, which payments and the right thereto are expressly declared to be non-assignable and nontransferable and, in the event of any attempted assignment or transfer, the Employer shall have no further liability hereunder.

22.    Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the day and year first above written.

Zoned Properties, Inc.		Mr. McLaren
By	/s/ Bryan McLaren	By	/s/ Bryan McLaren
	Bryan McLaren		Bryan McLaren
	Director		Chief Executive Officer

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APPENDIX A

Golden Parachute Agreement.

This Change of Control Termination Agreement (the “Agreement”) is entered into as of July 31, 2014 by and between Zoned Properties, Inc., a Nevada corporation (the “Corporation”) with its office at 16624 N 90^th Street #101, Scottsdale, Arizona 85260 and Bryan McLaren, the Employee of the Corporation.

Recitals

A. The Corporation considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel. In this connection, the Board of Directors of the Corporation (the “Board”) recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Corporation and its stockholders.

B. The Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Corporation’s management, including yourself, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Corporation.

C. In order to induce you to remain in the employ of the Corporation and in consideration of your agreement set forth below, the Corporation agrees that you shall receive the severance benefits set forth in this Agreement in the event your employment with the Corporation is terminated subsequent to a “change in control of the Corporation” (as defined in Section 2 below) under the circumstances described below. This Agreement is meant to supersede any other specific written agreements which may have been entered into between yourself and the Corporation concerning termination of employment.

Therefore, in consideration of your continued employment and the parties agreement to be bound by the terms contained in this Agreement, the parties agree as follows:

1. Term of Agreement. This Agreement shall commence on this date and shall continue in effect through December 31, 2039 provided, however, that commencing on December 31, 2039 and each December 31 afterwards, the term of this Agreement shall automatically be extended for one additional year unless, no later than the preceding November 1, the Corporation shall have given notice that it does not wish to extend this Agreement; provided, further, if a change in control of the Corporation shall have occurred during the original or any extended term of this Agreement, this Agreement shall continue in effect for a period of 12 months beyond the month in which such change in control occurred. Notwithstanding the foregoing, and provided no change of control shall have occurred, this Agreement shall automatically terminate upon the earlier to occur of (i) your termination of employment with the Corporation, or (ii) the Corporation’s furnishing you with notice of termination, irrespective of the effective date of such termination.

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2. Change in Control. No benefits shall be payable under this Agreement unless there shall have been a change in control of the Corporation, as set forth below. For purposes of this Agreement, a “change in control of the Corporation” shall mean a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Corporation is in fact required to comply with that regulation, provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or a corporation owned, directly or indirectly, by the stockholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation’s then outstanding securities; or (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Corporation to effect a transaction described in clauses (A) or (D) of this Section) whose election by the Board or nomination for election by the Corporation’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority; (C) the Corporation enters into an agreement, the consummation of which would result in the occurrence of a change in control of the Corporation; or (D) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other corporation, other than a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to it continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 30% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Corporation approve a plan of complete liquidation of the Corporation or an agreement for the sale or disposition by the Corporation of all or substantially all the Corporation’s assets.

3. Termination Following Change in Control. If any of the events described in Section 2 above constituting a change in control of the Corporation shall have occurred, you shall be entitled to the benefits provided in Subsection 4(iii) below upon the subsequent termination of your employment during the term of this Agreement unless such termination is (A) because of your death, Disability or Retirement, (B) by the Corporation for Cause, or (C) by you other than for Good Reason.

(i). Disability; Retirement. If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties with the Corporation for six consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, your employment may be terminated for “Disability.” Termination by the Corporation or you of your employment based on “Retirement” shall mean termination in accordance with the Corporation’s retirement policy, including early retirement, generally applicable to its salaried employees or in accordance with any retirement arrangement established with your consent with respect to you.

(ii). Cause. Termination by the Corporation of your employment for “Cause” shall mean termination upon (A) the willful and continued failure by you to substantially perform your duties with the Corporation (other than any such failure resulting from your incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance by you of a Notice of Termination for Good Reason as defined in Subsections 3(iv) and 3(iii), respectively) after a written demand for substantial performance is delivered to you by the Board, which demand specifically identifies the manner in which the Board believes that you have not substantially performed your duties, or (B) the willful engaging by you in conduct which is demonstrably and materially injurious to the Corporation, monetarily or otherwise. For purposes of this Subsection, no act, or failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Corporation. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clauses (A) or (B) of the first sentence of this Subsection and specifying the particulars in detail.

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(iii). Good Reason. You shall be entitled to terminate your employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence after a change in control of the Corporation of any of the following circumstances unless, in the case of paragraph (A), (E), (F), (G) or (H), such circumstances are fully corrected prior to the Date of Termination specified in the Notice of Termination, as defined in Subsections 3(v) and 3(iv), respectively, given in respect of them:

(A) the assignment to you of any duties inconsistent with your status and position as it exists immediately prior to the change in control of the Corporation or a substantial adverse alteration in the nature or status of your responsibilities from those in effect immediately prior to the change in control of the Corporation;

(B) a reduction by the Corporation in your annual base salary as in effect on this date or as the same may be increased from time to time except for across-the-board salary reductions similarly affecting all key employees of the Corporation and all key employees of any person in control of the Corporation;

(C) your relocation to a location not within 25 miles of your present office or job location, except for required travel on the Corporation’s business to an extent substantially consistent with your present business travel obligations;

(D) the failure by the Corporation, without your consent, to pay to you any portion of your current compensation, or to pay to you any portion of an installment of deferred compensation under any deferred compensation program of the Corporation, within seven days of the date such compensation is due;

(E) the failure by the Corporation to continue in effect any bonus to which you were entitled, or any compensation plan in which you participate immediately prior to the change in control of the Corporation which is material to your total compensation, including but not limited to the Corporation’s 2014 and 2015 Stock Option Plans, 401(k) Pre-Tax Retirement Savings Plan, and Flexible Benefit Plan, or any substitute plans adopted prior to the change of control in the Corporation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Corporation to continue your participation in it (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of your participation relative to other participants, as existed at the time of the change in control;

(F) the failure by the Corporation to continue to provide you with benefits substantially similar to those enjoyed by you under any of the Corporation’s life insurance, medical, health and accident, or disability plans in which you were participating at the time of the change in control of the Corporation, the failure to continue to provide you with a Corporation automobile or allowance in lieu of it, if you were provided with such an automobile or allowance in lieu of it at the time of the change of control of the corporation, the taking of any action by the Corporation which would directly or indirectly materially reduce any of such benefits or deprive you of any material fringe benefit enjoyed by you at the time of the change in control of the Corporation, or the failure by the Corporation to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Corporation in accordance with the Corporation’s normal vacation policy in effect at the time of the change in control of the Corporation;

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(G) the failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 of this Agreement; or

(H) any purported termination of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Subsection (iv) below (and, if applicable, the requirements of Subsection (ii) above); for purposes of this Agreement, no such purported termination shall be effective.

Your rights to terminate your employment pursuant to this Subsection shall not be affected by your incapacity due to physical or mental illness. Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason under this Agreement. In the event you deliver Notice of Termination based upon circumstances set forth in Paragraph (A), (E), (F), (G) or (H) above, which are fully corrected prior to the Date of Termination set forth in your Notice of Termination, such Notice of Termination shall be deemed withdrawn and of no further force or effect.

(iv). Notice of Termination. Any purported termination of your employment by the Corporation or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 of this Agreement. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

(v). Date of Termination, Etc. “Date of Termination” shall mean (A) if your employment is terminated for Disability, 30 days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such 30-day period), and (B) if your employment is terminated pursuant to Subsection (ii) or (iii) above or for any other reason (other than Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Subsection (ii) above shall not be less than 30 days, and in the case of a termination pursuant to Subsection (iii) above shall not be less than 15 nor more than 60 days, respectively, from the date such Notice of Termination is given); provided that if within 15 days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this provision), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal has expired and no appeal has been perfected); provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Corporation will continue to pay you your full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary) and continue you as a participant in all compensation, benefit and insurance plans in which you were participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Subsection. Amounts paid under this Subsection are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement except to the extent otherwise provided in subsection 4(iv).

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4. Compensation Upon Termination or During Disability. Following a change in control of the Corporation, as defined by Section 2, upon termination of your employment or during a period of disability you shall be entitled to the following benefits:

(i). During any period that you fail to perform your full-time duties with the Corporation as a result of incapacity due to physical or mental illness, you shall continue to receive your base salary at the rate in effect at the commencement of any such period, together with all amounts payable to you under any compensation plan of the Corporation during such period, until this Agreement is terminated pursuant to Section 3(i) above. Thereafter, or in the event your employment shall be terminated by the Corporation or by you for Retirement, or by reason of your death, your benefits shall be determined under the Corporation’s retirement, insurance and other compensation programs then in effect in accordance with the terms of such programs.

(ii). If your employment shall be terminated by the Corporation for Cause or by you other than for Good Reason, Disability, death or Retirement, the Corporation shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts and benefits to which you are entitled under any compensation plan of the Corporation at the time such payments are due, and the Corporation shall have no further obligations to you under this Agreement.

(iii). If your employment by the Corporation shall be terminated (a) by the Corporation other than for Cause, Retirement or Disability or (b) by you for Good Reason, then you shall be entitled to the benefits provided below:

(A). The Corporation shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, plus all other amounts and benefits to which you are entitled under any compensation plan of the Corporation, at the time such payments are due, except as otherwise provided below.

(B). In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Corporation shall pay as severance pay to you a lump sum severance payment (together with the payments provided in paragraphs C and D, below, the “Severance Payments”) equal to five times the sum of your annual base salary in effect immediately prior to the occurrence of the circumstance giving rise to the Notice of Termination given in respect of them.

(C). The Corporation shall pay to you any deferred compensation, including, but not limited to deferred bonuses, allocated or credited to you or your account as of the Date of Termination.

(D). In lieu of shares of common stock of the Corporation (the “Corporation’s Shares”) issuable upon exercise of outstanding options (“Options”), if any, granted to you under the Corporation’s Stock Option Plans (which Options shall be cancelled upon the making of the payment referred to below) you shall receive an amount in cash equal to the product of (i) the excess of the closing price of the Corporation’s Shares as reported on the NASDAQ-NMS Automatic Quotation System on or nearest the Date of Termination (or, if not so reported, on the basis of the average of the lowest asked and highest bid prices on or nearest the Date of Termination), over the per share exercise price of each Option held by you (whether or not then fully exercisable) plus the amount of any applicable cash appreciation rights, times (ii) the number of the Corporation’s Shares covered by each such Option.

(E). The Corporation shall also pay to you all legal fees and expenses incurred by you as a result of such termination including all such fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) to any payment or benefit provided under this Agreement)).

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(F). The payments provided for in paragraphs (B), (C), and (D) above, shall be made no later than the fifth day following the Date of Termination, provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Corporation shall pay to you on such day an estimate, as determined in good faith by the Corporation, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount can be determined but in no event later than the 30th day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Corporation to you payable on the fifth day after demand by the Corporation (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code).

(iv). In the event that you are a “disqualified individual” within the meaning of Section 280G of the Code, the parties expressly agree that the payments described in this Section 4 and all other payments to you under any other agreements or arrangements with any persons which constitute “parachute payments” within the meaning of Section 280G of the Code are collectively subject to an overall maximum limit. Such maximum limit shall be $1 less than the aggregate amount which would otherwise cause any such payments to be considered a “parachute payment” within the meaning of Section 280G of the Code, as determined by the Corporation. Accordingly, to the extent that such payments would be considered a “parachute payment” with respect to you, then the portions of such payments shall be reduced or eliminated in the following order until the remaining change of control termination payments with respect to you is within the maximum described in this subsection (iv):

(A) First, any cash payment to you;

(B) Second, any change of control termination payments not described herein; and

(C) Third, any forgiveness of indebtedness of yours to the Corporation.

You expressly and irrevocably waive any and all rights to receive any change of control termination payments, which exceed the maximum limit described in this subsection (iv).

(v). You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by you to the Corporation, or otherwise except as specifically provided in this Section 4.

(vi). In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits payable to you under the Corporation’s 401(k) Pre-Tax Retirement Savings Plan and any other plan or agreement relating to retirement benefits.

5. Successors; Binding Agreement.

(i). The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. Failure of the Corporation to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Corporation in the same amount and on the same terms as you would be entitled to under this Agreement if you terminate your employment for Good Reason following a change in control of the Corporation, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Corporation” shall mean the Corporation as defined above and any successor to its business and/or assets as which assumes and agrees to perform this Agreement by operation of law, or otherwise.

Page 11 of 13

(ii). This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, heirs, distributes, and legatees. If you should die while any amount would still be payable to you if you had continued to live, all such amounts, unless otherwise provided in this Agreement, shall be paid in accordance with the terms of this Agreement to your legatee or other designee or, if there is no such designee, to your estate.

6. Notice. For the purpose of this Agreement, all notices and other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to the Corporation shall be directed to the attention of the Board with a copy to the Secretary of the Corporation, or to such other address as either party may have furnished to the other in writing in accordance with this Agreement, except that notice of change of address shall be effective only upon receipt.

7. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party to this Agreement at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter of this Agreement have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for shall be paid net of any applicable withholding or deduction required under federal, state or local law. The obligations of the Corporation under Section 4 shall survive the expiration of the term of this Agreement.

8. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

9. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

10. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in the State of Arizona, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

11. Entire Agreement. This Agreement sets forth the entire understanding of the parties with respect to its subject matter and supersedes all prior written or oral agreements or understandings with respect to such subject matter.

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If this letter sets forth our agreement on its subject matter, kindly sign and return to the Corporation the enclosed copy of this letter which will then constitute our agreement on this subject.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the day and year first above written.

Zoned Properties, Inc.		Mr. McLaren
By	/s/ Bryan McLaren	By	/s/ Bryan McLaren
	Bryan McLaren		Bryan McLaren
	Director		Chief Executive Officer

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EX-10.2

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of May 1, 2015 between Zoned Properties, Inc., a Nevada corporation (the “Company”) and Patricia Haugland, an individual residing in the State of Arizona (“Executive”).

RECITAL

The Company and Executive desire to enter into this Agreement to ensure the Company of the services of Executive, to provide for compensation and other benefits to be paid and provided by the Company to Executive in connection therewith, and to set forth the rights and duties of the parties in connection therewith.

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereby agree as follows:

1.     Title; Directorship.

(a) Title. The Company hereby employs Executive as its Chief Operating Officer, and Executive hereby accepts such employment, on the terms and conditions set forth herein. During the term of this Agreement, Executive shall be and have the title, duties and authority of Chief Operating Officer of the Company and shall devote her entire business time and all reasonable efforts to her employment and shall perform diligently such duties as are customarily performed by the Chief Operating Officer of companies of like size and structure as the Company, together with such other duties as may be reasonably required from time to time by the Chief Executive Officer of the Company. Without limiting the generality of any of the foregoing, and except as hereafter expressly agreed in writing by Executive, Executive shall not be required to report to any party other than to the Chief Executive Officer of the Company.

2.     Term. Subject to the provisions for termination hereinafter provided, the term of this Agreement shall begin on the date hereof and shall end at 11:59 p.m., local time, on the date that is five (5) years from the date hereof, provided, however, that the term of this Agreement shall automatically renew for successive one (1) year terms, unless Executive or the Company gives written notice to the other not less than sixty (60) days prior the expiration of the then current term that she or it, as the case may be, is electing not to so extend the term of this Agreement (the “Employment Period”). Notwithstanding the foregoing, the term of this Agreement shall end on the date on which Executive’s employment is earlier terminated by her or the Company in accordance with the provisions of Paragraph 7(a) below.

1 Initials: ______ / ______

3.     Outside Interests. Executive shall not, without the prior written consent of the Company, directly or indirectly, during the term of this Agreement, other than in the performance of duties naturally inherent to the business of the Company and in furtherance thereof, render services of a business, professional or commercial nature to any other person or firm, whether for compensation or otherwise; provided, however, that Executive may attend to outside passive investments, and serve as a director, trustee or officer of, or otherwise participate in, educational, welfare, social, religious and civic organizations, so long as such activities do not materially interfere with Executive’s full-time employment hereunder. Notwithstanding the above, the Executive shall be authorized to continue to receive the passive income generated from: (i) Executive’s IBA Agreement with West USA, as is currently the case, and (ii) Executive’s spouses’ ownership interest in a business venture related to the ownership and rental of certain real estate properties.

4.     Compensation.

(a) Salary. For all services she may render to the Company during the term of this Agreement, the Company shall pay to Executive the following salary in those installments customarily used in payment of salaries to the Company’s senior executives (but in no event less frequently than monthly):

(i)      for the first (1^st) year of this Agreement, a salary of One Hundred Thousand Dollars ($100,000) per annum plus Fifteen Thousand (15,000) shares of the Company’s restricted common stock issuable upon signing of this document.

(ii)     for each year thereafter during the term of this Agreement, Executive’s salary shall be determined by the Compensation Committee under direction of the Company’s Board of Directors.

(b) Signing Bonus. Executive shall be granted a signing bonus consisting of an option to purchase 50,000 shares (the “Option”) of the Company’s common stock at an Option price of $1.00, which Option shall vest ninety (90) days after the date of this Agreement (the “Probationary Period”), provided this Agreement has not been terminated as provided hereunder. The Option shall be issued on the date hereof and delivered to the Company’s legal counsel, to be held in escrow, pending Executive’s satisfactory completion of the Probationary Period.

(c) Bonus Participation. Executive shall be entitled to participate in any bonus program implemented by the Compensation Committee of the Board of Directors for the Company’s senior executives generally, with pertinent terms and goals to be established quarterly or otherwise by the Compensation Committee in its sole discretion. The Company shall notify the Executive on a regular basis the status of any potential pending bonus program.

(d) Benefits. Executive shall be entitled, subject to the terms and conditions of the appropriate plans, to all benefits provided by the Company to senior executives generally from time to time during the term of this Agreement.

(e) Vacation. Executive shall be entitled to THREE (3) weeks of paid vacation per year, which shall vest monthly on a pro-rata schedule, and which cannot be carried over from year to year without prior written approval from the CEO.

(f) Automobile. Executive shall not be entitled to use of a Company automobile; however, if at any time the Executive shall be entitled to the use of a Company automobile, the Company shall provide automobile insurance therefor. Executive understands and agrees that such Automobile would be furnished for business use only.

(g) Insurance. Executive shall be reimbursed up to ZERO ($0.00) per month for payment of Executive’s medical/health and life insurance.

(h) Cell Phone/laptop. The Company shall not provide Executive with a cell phone nor a laptop; however, in the event that the Company does provide Executive with either a cell phone or a laptop, those items shall remain the property the Company and shall be returned upon termination of this Agreement.

2 Initials: ______ / ______

(i) Business Expenses. Executive will be issued a Company expense card for payment of business expenses in furtherance of Executive’s responsibilities and obligations under this Agreement. Executive shall deliver to the Company (no less than monthly or immediately upon request by the Company) proper documentation for all such expenses and charges for all travel, hotel and business expenses when incurred on Company business during the term of this Agreement.

(j) Perquisites. Executive shall be entitled to such perquisites as are provided by the Company to senior executives generally from time to time during the term hereof.

(k) Liability Insurance. Executive will at all relevant times be covered under any contract of directors and officers liability insurance that covers officers of the Company.

(l) ESOP Stock Plan. Executive shall be granted 250,000 shares from the Company’s Employee Stock Option Plan (ESOP), over a five (5) year period, upon satisfactory completion of the Probationary Period and in accordance with the vesting schedule outlined below:

Vesting Date	# of Shares	Performance Measures Met
05/01/16	50,000	TBD by CEO & Executive
05/01/17	50,000	TBD by CEO & Executive
05/01/18	50,000	TBD by CEO & Executive
05/01/19	50,000	TBD by CEO & Executive
05/01/20	50,000	TBD by CEO & Executive

As a prerequisite to the vesting of ESOP shares, on each Vesting Date, Executive must be employed and serving as the Company’s COO, this Agreement must be in full force and effect and no default shall exist hereunder.

Upon a Change in Control and provided that the Agreement is in full force and effect, all un-vested ESOP shares shall vest immediately. For purposes hereof, “Change in Control” means the sale of all or substantially all of the capital stock (other than the sale of capital stock to one or more venture capitalists or other institutional investors pursuant to an equity financing, including a debt financing that is convertible into equity, of the Company approved by a majority of the Board of Directors), assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a transaction in which all or substantially all of the individuals and entities who were beneficial owners of the Common Stock immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

5.     Executive Stock Awards Plan. During the term of this Agreement, Executive shall participate in any executive stock award plan the Company’s Board of Directors may adopt.

6.     Payment in the Event of Death or Disability.

(a) In the event of Executive’s death or Disability during the term of this Agreement, for a period equal to the lesser of (i) three (03) months following the date of such death or Disability or (ii) the balance of the term that would have remained hereunder at such date had Executive’s death or disability not occurred, the Company shall continue to pay to Executive (or her estate) Executive’s then effective per annum rate of salary, as determined under Paragraph 4(a), and provide to Executive (or to her family members covered under her family medical coverage) the same family medical coverage as provided to Executive on the date of such death or Disability.

3 Initials: ______ / ______

(b) Except as otherwise provided in Paragraph 6(a), in the event of Executive’s death or Disability Executive’s employment hereunder shall terminate and Executive shall be entitled to no further compensation or other payments or benefits under this Agreement, except as to any unpaid salary, bonus, or benefits accrued, earned and/or fully vested up to and including the date of such death or Disability.

(c) For purposes of this Agreement, Executive’s Disability shall be deemed to have occurred after one hundred fifty (150) days in the aggregate during any consecutive twelve (12) month period, or after ninety (90) consecutive days, during which one hundred fifty (150) or ninety (90) days, as the case may be, Executive, by reason of her physical or mental disability or illness, shall have been unable to discharge her duties hereunder. The date of Disability shall be such one hundred fiftieth (150th) or ninetieth (90th) day, as the case may be. If the Company or Executive, after receipt of notice of Executive’s Disability from the other, dispute that Executive’s Disability shall have occurred, Executive shall promptly submit to a physical examination by the chief of medicine of any major accredited hospital selected by the Company and, unless such physician shall issue his written statement to the effect that in his or her opinion, based on his or her diagnosis, Executive is capable of resuming her employment and devoting her full time and energy to discharging her duties within thirty (30) days after the date of such statement, such Disability shall be deemed to have occurred.

(d) The payments to be made by the Company to Executive hereunder shall be offset and reduced by the amount of any insurance proceeds (on a tax-effected basis) paid to Executive (or her estate) from insurance policies obtained by the Company other than insurance policies provided under Company-wide employee benefit and welfare plans.

7.     Termination.

(a) The employment of Executive under this Agreement:

(i)      shall be terminated automatically upon the death or Disability of Executive;

(ii)     may be terminated for Cause at any time by the Company, with any such termination not being in limitation of any other right or remedy the Company may have under this Agreement or otherwise;

(iii)     may be terminated at any time by the Company without Cause with thirty (30) days’ advance notice to Executive;

(iv)    may be terminated (a) at any time by Executive with thirty (30) days’ advance notice to the Company; (b) at any time during the Probationary Period, by the Company and (c) shall be terminated automatically if Executive does not accept assumption of this Agreement by, or an offer of employment from, a purchaser of all or substantially all of the assets of the Company; or

(v)    may be terminated at any time by Executive if the Company materially breaches this Agreement and fails to cure such breach within thirty (30) days of written notice of such breach from Executive, provided that Executive has given notice of such breach within ninety (90) days after she has knowledge thereof and the Company did not have Cause to terminate Executive at the time such breach occurred.

4 Initials: ______ / ______

(b) Upon any termination hereunder, Executive shall be deemed automatically to have resigned from all offices and any directorship held by her in the Company, unless the Company informs Executive otherwise.

(c) Executive’s employment with the Company for all purposes shall be deemed to have terminated as of the effective date of such termination hereunder (the “Date of Termination”), irrespective of whether the Company has a continuing obligation under this Agreement to make payments or provide benefits to Executive after such date.

8.     Certain Termination Payments.

(a) If Executive’s employment with the Company is terminated by the Company without Cause or by Executive pursuant to Paragraph 7(a)(v), in either case other than within two years after a Change in Control, the Company shall (i) continue to pay to Executive the per annum rate of salary then in effect under Paragraph 4(a) for the duration of the initial five year term or any renewal term, and provide her and her family with the benefits described in Paragraph 4 then in effect (unless the terms of the applicable plans expressly prohibit the continuation of such benefits after such termination and cannot be amended, with applicability of such amendment limited to Executive, to provide for such continuation, in which case the Company shall procure and pay for substantially similar substitute benefits except for any pension or 401(k) Plan benefit) for the remaining un-renewed Term of the Agreement. In addition, all accrued but un-vested future Company stock grants issuable to the Executive pursuant to this Agreement shall become vested.

(b) If Executive’s employment is terminated by the Company with Cause or is terminated pursuant to Paragraph 7(a)(iv), Executive shall be entitled to no further compensation or other payments or benefits under this Agreement, except as to that portion of any unpaid salary and benefits accrued and earned by her under Paragraph 4 up to and including the Date of Termination.

9.     Definitions.

(a) “Beneficial Owner” shall have the meaning provided in Rule 13d-3 promulgated under the Exchange Act.

(b) “Cause” means:

(i)      Executive’s conviction of, or plea of “no contest” to, a felony;

(ii)     Executive’s willfully engaging in an act or series of acts of gross misconduct that result in demonstrable and material injury to the Company; or

(iii)    Executive’s material breach of any provision of this Agreement, which breach has not been cured in all material respects within twenty (20) days after the Company gives notice thereof to Executive.

(c) “Change in Control” means the sale of all or substantially all of the capital stock (other than the sale of capital stock to one or more venture capitalists or other institutional investors pursuant to an equity financing, including a debt financing that is convertible into equity, of the Company approved by a majority of the Board of Directors), assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a transaction in which all or substantially all of the individuals and entities who were beneficial owners of the Common Stock immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

5 Initials: ______ / ______

(d) “Person” shall have the meaning provided in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof, and shall include a “group” (as defined in Section 13(d) of the Exchange Act).

10.    Certain Covenants

(a) Noncompete and Nonsolicitation. Executive acknowledges the Company’s reliance on and expectation of Executive’s continued commitment to performance of her duties and responsibilities during the term of this Agreement. In light of such reliance and expectation, during the term hereof and for one (1) year after termination of Executive’s employment and this Agreement under Paragraph 7 hereof, Executive shall not, directly do or suffer any of the following:

(i)      Subject to Paragraph 3 above, own, manage, control or participate in the ownership, management, or control of, or be employed or engaged by or otherwise affiliated or associated as a consultant, independent contractor or otherwise with, any corporation, partnership, proprietorship, firm, association or other business entity, or otherwise engage in any business, which is in competition with the business of the Company as and where conducted by it at the time of such termination; provided, however, that the ownership of not more than five percent (5%) of any class of publicly traded securities of any entity shall not be deemed a violation of this covenant.

(ii)     Solicit the employment of, assist in the soliciting the employment of, or otherwise solicit the association in business with any person or entity of, any employee, consultant or agent of the Company; or

(iii)    Induce any person who is a customer of the Company to terminate said relationship.

(b) Nondisclosure; Return of Materials. During the term of her employment by the Company and following termination of such employment, Executive will not disclose (except as required by her duties to the Company), any concept, design, process, technology, trade secret, customer list, plan, embodiment or invention, any other intellectual property (“Intellectual Property”) or any other confidential information, whether patentable or not, of Company of which Executive becomes informed or aware during her employment, whether or not developed by Executive. In the event of the termination of her employment with the Company or the expiration of this Agreement, Executive will return to the Company all documents, data and other materials of whatever nature, including, without limitation, drawings, specifications, research, reports, embodiments, software and manuals that pertain to her employment with the Company or to any Intellectual Property and shall not retain or cause or allow any third party to retain photocopies or other reproductions of the foregoing.

(c) Executive expressly agrees and understands that the remedy at law for any breach by her of this Paragraph 10 may be inadequate and that the damages flowing from such breach are not easily measured in monetary terms. Accordingly, it is acknowledged that, upon adequate proof of Executive’s violation of any provision of this Paragraph 10, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach and may withhold any amounts owed to Executive pursuant to this Agreement. Nothing in this Paragraph 10 shall be deemed to limit the Company’s remedies at law or in equity for any breach by Executive of any of the provisions of this Paragraph 10 that may be pursued by the Company.

6 Initials: ______ / ______

(d) If Executive shall violate any legally enforceable provision of this Paragraph 10 as to which there is a specific time period during which she is prohibited from taking certain actions or from engaging in certain activities, as set forth in such provision, then, in such event, such violation shall toll the running of such time period from the date of such violation until such violation shall cease.

(e) Executive has carefully considered the nature and extent of the restrictions upon her and the rights and remedies conferred upon the Company under this Paragraph 10, and hereby acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition that otherwise would be unfair to the Company, do not stifle the inherent skill and experience of Executive, would not operate as a bar to Executive’s sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to the detriment to Executive.

(f) Notwithstanding anything contained herein to the contrary, nothing in this Agreement shall prohibit the Executive from making any disclosure of violations of federal law or regulation to the Department of Justice, SEC, or other relevant government agency or entity.

11.    Withholding Taxes. All payments to Executive hereunder shall be subject to withholding on account of federal, state and local taxes as required by law.

12.    No Conflicting Agreements. Executive represents and warrants that she is not a party to any agreement, contract or understanding, whether an employment contract or otherwise, that would restrict or prohibit her from undertaking or performing employment in accordance with the terms and conditions of this Agreement.

13.    Severable Provisions. The provisions of this Agreement are severable and if any one or more of its provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provision to the extent enforceable in any jurisdiction nevertheless shall be binding and enforceable.

14.    Binding Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding on, the Company and its successors and assigns, and the rights and obligations (other than obligations to perform services) of Executive under this Agreement shall inure to the benefit of, and shall be binding upon, Executive and her heirs, personal and legal representatives, executors, successors and administrators. The Company may assign this Agreement to a purchaser (or an affiliate of a purchaser) of all or substantially all the assets of the Company. As used in this Agreement, the “Company” shall mean the Company as hereinbefore defined and any successor or assign to its assets as aforesaid that becomes bound by all the terms and provisions of this Agreement. If the Executive should die while any amounts are still payable to her, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

15.    Notices. Notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when sent by certified mail, postage prepaid, addressed to the intended recipient at the address set forth at the end of this Agreement, or at such other address as such intended recipient hereafter may have designated most recently to the other party hereto with specific reference to this Paragraph 15.

7 Initials: ______ / ______

16.    Consent to Jurisdiction. Executive and the Company each irrevocably: (i) submits to the exclusive jurisdiction of the Arizona courts and the United States district court(s) in Arizona for the purpose of any proceedings arising out of this Agreement or any transaction contemplated by this Agreement; (ii) agrees not to commence such proceeding except in these courts; (iii) agrees that service of any process, summons, notice or document by U.S. registered mail to a party’s address as provided herein shall be effective service of process for any such proceeding; and (iv) waives any objection to the laying of venue of any such proceeding in these courts. The Executive understands and agrees that the Company is a Nevada based Company and that the Executive is required to perform her duties in all jurisdictions that the Company may operate. The Company may allow the Executive to perform services in other locations, including out of Executive’s home, on a case by case basis, but in no event will such accommodation alter or serve as a waiver to this jurisdictional clause. This jurisdictional clause is a material provision to this contract and the Company would not enter into this Agreement, but for Executive’s agreement and understanding to this provision.

17.    Waiver of Jury Trial. Each party waives, to the fullest extent permitted by law, any right she or it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated by this Agreement. Each party certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce this waiver; and acknowledges that he or it and the other party have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Paragraph 17.

18.    Waiver. The failure of either party to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision as to any future violation thereof, or prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative and the waiver of any single remedy shall not constitute a waiver of such party’s right to assert all other legal remedies available to it under the circumstances.

19.    Miscellaneous. This Agreement supersedes all prior agreements and understandings between the parties. This Agreement may not be modified or terminated orally. All obligations and liabilities of each party hereto in favor of the other party hereto relating to matters arising prior to the date hereof have been fully satisfied, paid and discharge. No modification, termination or attempted waiver shall be valid unless in writing and signed by the party against whom the same is sought to be enforced.

20.    Governing Law. This Agreement shall be governed by and construed exclusively according to the laws of the State of Arizona.

21.    Captions and Paragraph Headings. Captions and paragraph headings used herein are for convenience and are not a part of this Agreement and shall not be used in construing it.

22.    Enforcement Costs. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees, court costs and all expenses even if not taxable as court costs (including, without limitation, all such fees, costs and expenses incident to arbitration, appellate, bankruptcy and post-judgment proceedings), incurred in that action or proceeding, in addition to any other relief to which such party or parties may be entitled.

8 Initials: ______ / ______

23.    Rejection of Benefits. If Executive chooses not to accept any benefits offered by the Company herein, the Company shall not reimburse the Executive for any such benefit nor provide a cash equivalent in lieu of providing such benefit.

   IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first set forth above

“Company”

Zoned Properties, Inc.

By: /s/ Bryan McLaren

Name: Bryan McLaren

Title: CEO / President

Date: 5-1-15

“Executive”

By: /s/ Patricia Haugland

Name: Patricia Haugland

Title: COO

Date: May 1, 2015

9 Initials: ______ / ______

EX-10.3

Exhibit 10.3

 

Board Member Agreement

THIS BOARD MEMBER AGREEMENT ("Agreement") is made effective the 1st day of October, 2014, by and between Zoned Properties, Inc., a Nevada corporation ("The Company"), and Alex McLaren, an individual resident of the State of Arizona ("The Director").

WHEREAS, the Company is engaged as a lessor of land, facilities and equipment to the medical marijuana industry (the “Business”).

WHEREAS, the Company has established a Board of Directors to assist the Company in its endeavors to manage the Business so as to maximize returns for the Company’s shareholders; and

NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:

1. Term. The term of this Agreement shall commence on the date hereof (the “Effective Date”), and shall continue until the Director no longer serves on the Company’s Board of Directors (the “Term”), it being understood that the Director shall remain on the Company’s Board of Directors at the discretion of the Company’s shareholders.

2. Compensation.

a. Director's Fees. In consideration of the services to be rendered under this Agreement as a member of the Board of Directors and for serving on various committees of the Board of Directors, Director shall receive annual compensation of 10,000 Shares of common stock in ZDPY, payable at the direction of the company in one certificate or every quarter broken down by equal installments. First tranche or complete annual compensation shall be delivered with the first 90 days of the execution of this agreement at the company’s discretion.

i. If the Director does not complete a full year of service, compensation will be pro-rated based on the term served (Ex. 6 months of service Director will receive 5,000 shares of ZDPY common stock).

b. Expenses. The Company shall reimburse Director for all reasonable business expenses incurred in the performance of his duties hereunder in accordance with Company's expense reimbursement guidelines.

c. Indemnification. Company will indemnify and defend Director and hold Director harmless against any liability incurred in the performance of Director’s service on the Board of Directors pursuant to this Agreement (the “Services”) to the fullest extent authorized in Company's Certificate of Incorporation, as amended, bylaws, as amended, applicable law and as provided in any individual indemnification agreements the Company many enter into with the Director. Company has or will in a timely manner purchase Director's and Officer's liability insurance, and Director shall be entitled to the protection of any insurance policies the Company maintains for the benefit of its Directors and Officers against all costs, charges and expenses in connection with any action, suit or proceeding to which he may be made a party by reason of his affiliation with Company, its subsidiaries, or affiliates or Director’s Services hereunder.

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3. Termination.

a. Right to Terminate. At any time, Director may be removed as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Director may resign as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Notwithstanding anything to the contrary contained in or arising from this Agreement or any statements, policies, or practices of Company, neither Director nor Company shall be required to provide any advance notice or any reason or cause for termination of Director's status, except as provided in Company's Certificate of Incorporation, as amended, Company's bylaws, as amended, and applicable law.

b. Effect of Termination as Director. Upon a termination of Director's status as a Director, this Agreement will terminate; Company shall pay to Director all compensation to which Director is entitled up through the date of termination. Thereafter, all of Company's obligations under this Agreement shall cease.

4. Non−Disclosure, Ownership of Intellectual Property

a. Director covenants and undertakes that, during the term of this Agreement and thereafter, absent the Company’s prior written consent, all information, written or oral, relating to the Company, its parents, subsidiaries or affiliates, the Company’s Business or condition (actual or planned), disclosed to him by the Company, or which otherwise became known to him in connection with the performance of the Services (the “Information”), shall be maintained by him in full and absolute confidence, and he shall not use such Information, directly or indirectly, in whole or in part, for his own benefit or any purpose whatsoever except as specifically and explicitly provided hereunder. Director’s undertaking hereunder shall not apply to Information which is in, or becomes part of, the public domain, or which was known by Director before the time of disclosure.

b. Director agrees and undertakes that, so long as this Agreement is in effect and for a period of one year thereafter, neither he, nor any entity in which he holds a majority of the equity interest or voting control (either directly or through other entities in which he holds a majority of the equity interest or voting control) (each a “Controlled Entity”), shall not engage as a lessor of land, facilities and equipment to the medical marijuana industry (such activities, the “Competing Activities”). The Company acknowledges that Director has ownership interests in or other relationships with entities that are not Controlled Entities (each a “Non−Controlled Entity”), and the restriction in the preceding sentence does not apply to activities of Non−Controlled Entities. However, Director agrees to inform the Company at such time as the Non−Controlled Entity commences Competing Activities, provided that he is aware of the Competing Activities and the disclosure would not violate a non−disclosure agreement with the Non−Controlled Entity.

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5. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the matters referred to herein, and no other arrangement, understanding or agreement, verbal or otherwise, shall be binding upon the parties hereto. This Agreement may not be assigned by any of the parties hereto, and may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. Headings to Sections herein are for the convenience of the parties only, and are not intended to be or to affect the meaning or interpretation of this Agreement. The Parties shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Parties may have for the breach of this Agreement. In the event that any covenant, condition or other provision contained in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, the same shall be deemed severable from the remainder thereof, and shall in no way affect, impair or invalidate any other covenant, condition or other provision therein contained. If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent permitted by law. All notices required to be delivered under this Agreement shall be effective only if in writing and shall be deemed given when received by the party to whom notice is required to be given and shall be delivered personally, or by registered mail to the addresses set forth above. The parties agree that any suit, action or proceeding between Director (and his attorneys, successors, and assigns) and the Company (and its affiliates, shareholders, directors, officers employees, members, agents, successors, attorneys, and assigns) relating to the Services or the termination of those Services shall be brought in either the United States District Court in an Arizona state court in the county of Maricopa and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this section shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. This Agreement shall be construed and interpreted in accordance with the laws of the State of Arizona.

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IN WITNESS WHEREOF, the undersigned do hereby execute this Consent to Action to be effective as of October 1, 2014.

Company		Director
By	/s/ Bryan McLaren	By	/s/ Alex McLaren
	Bryan McLaren		Alex McLaren
	Chief Executive Officer		Director
	October 1, 2014		October 1, 2014

Zoned Properties, Inc. 16624 N. 90^th Street, Suite #101  Scottsdale, AZ 85260  (877) 360-8839 Alex McLaren 5568 E. Sheena Dr.  Scottsdale, Arizona 85254   (602) 787-0795

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EX-10.4

Exhibit 10.4

 

Board Member Agreement

THIS BOARD MEMBER AGREEMENT ("Agreement") is made effective the 1st day of October, 2014, by and between Zoned Properties, Inc., a Nevada corporation ("The Company"), and Art Friedman, an individual resident of the State of Florida ("The Director").

WHEREAS, the Company is engaged as a lessor of land, facilities and equipment to the medical marijuana industry (the “Business”).

WHEREAS, the Company has established a Board of Directors to assist the Company in its endeavors to manage the Business so as to maximize returns for the Company’s shareholders; and

NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:

1. Term. The term of this Agreement shall commence on the date hereof (the “Effective Date”), and shall continue until the Director no longer serves on the Company’s Board of Directors (the “Term”), it being understood that the Director shall remain on the Company’s Board of Directors at the discretion of the Company’s shareholders.

2. Compensation.

a. Director's Fees. In consideration of the services to be rendered under this Agreement as a member of the Board of Directors and for serving on various committees of the Board of Directors, Director shall receive annual compensation of 10,000 Shares of common stock in ZDPY, payable at the direction of the company in one certificate or every quarter broken down by equal installments. First tranche or complete annual compensation shall be delivered with the first 90 days of the execution of this agreement at the company’s discretion.

i. If the Director does not complete a full year of service, compensation will be pro-rated based on the term served (Ex. 6 months of service Director will receive 5,000 share of ZDPY common stock).

b. Expenses. The Company shall reimburse Director for all reasonable business expenses incurred in the performance of his duties hereunder in accordance with Company's expense reimbursement guidelines.

c. Indemnification. Company will indemnify and defend Director and hold Director harmless against any liability incurred in the performance of Director’s service on the Board of Directors pursuant to this Agreement (the “Services”) to the fullest extent authorized in Company's Certificate of Incorporation, as amended, bylaws, as amended, applicable law and as provided in any individual indemnification agreements the Company many enter into with the Director. Company has or will in a timely manner purchase Director's and Officer's liability insurance, and Director shall be entitled to the protection of any insurance policies the Company maintains for the benefit of its Directors and Officers against all costs, charges and expenses in connection with any action, suit or proceeding to which he may be made a party by reason of his affiliation with Company, its subsidiaries, or affiliates or Director’s Services hereunder.

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3. Termination.

a. Right to Terminate. At any time, Director may be removed as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Director may resign as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Notwithstanding anything to the contrary contained in or arising from this Agreement or any statements, policies, or practices of Company, neither Director nor Company shall be required to provide any advance notice or any reason or cause for termination of Director's status, except as provided in Company's Certificate of Incorporation, as amended, Company's bylaws, as amended, and applicable law.

b. Effect of Termination as Director. Upon a termination of Director's status as a Director, this Agreement will terminate; Company shall pay to Director all compensation to which Director is entitled up through the date of termination. Thereafter, all of Company's obligations under this Agreement shall cease.

4. Non−Disclosure, Ownership of Intellectual Property

a. Director covenants and undertakes that, during the term of this Agreement and thereafter, absent the Company’s prior written consent, all information, written or oral, relating to the Company, its parents, subsidiaries or affiliates, the Company’s Business or condition (actual or planned), disclosed to him by the Company, or which otherwise became known to him in connection with the performance of the Services (the “Information”), shall be maintained by him in full and absolute confidence, and he shall not use such Information, directly or indirectly, in whole or in part, for his own benefit or any purpose whatsoever except as specifically and explicitly provided hereunder. Director’s undertaking hereunder shall not apply to Information which is in, or becomes part of, the public domain, or which was known by Director before the time of disclosure.

b. Director agrees and undertakes that, so long as this Agreement is in effect and for a period of one year thereafter, neither he, nor any entity in which he holds a majority of the equity interest or voting control (either directly or through other entities in which he holds a majority of the equity interest or voting control) (each a “Controlled Entity”), shall not engage as a lessor of land, facilities and equipment to the medical marijuana industry (such activities, the “Competing Activities”). The Company acknowledges that Director has ownership interests in or other relationships with entities that are not Controlled Entities (each a “Non−Controlled Entity”), and the restriction in the preceding sentence does not apply to activities of Non−Controlled Entities. However, Director agrees to inform the Company at such time as the Non−Controlled Entity commences Competing Activities, provided that he is aware of the Competing Activities and the disclosure would not violate a non−disclosure agreement with the Non−Controlled Entity.

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5. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the matters referred to herein, and no other arrangement, understanding or agreement, verbal or otherwise, shall be binding upon the parties hereto. This Agreement may not be assigned by any of the parties hereto, and may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. Headings to Sections herein are for the convenience of the parties only, and are not intended to be or to affect the meaning or interpretation of this Agreement. The Parties shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Parties may have for the breach of this Agreement. In the event that any covenant, condition or other provision contained in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, the same shall be deemed severable from the remainder thereof, and shall in no way affect, impair or invalidate any other covenant, condition or other provision therein contained. If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent permitted by law. All notices required to be delivered under this Agreement shall be effective only if in writing and shall be deemed given when received by the party to whom notice is required to be given and shall be delivered personally, or by registered mail to the addresses set forth above. The parties agree that any suit, action or proceeding between Director (and his attorneys, successors, and assigns) and the Company (and its affiliates, shareholders, directors, officers employees, members, agents, successors, attorneys, and assigns) relating to the Services or the termination of those Services shall be brought in either the United States District Court in an Arizona state court in the county of Maricopa and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this section shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. This Agreement shall be construed and interpreted in accordance with the laws of the State of Arizona.

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IN WITNESS WHEREOF, the undersigned do hereby execute this Consent to Action to be effective as of October 1, 2014.

Company		Director
By	/s/ Bryan McLaren	By	/s/ Art Friedman
	Bryan McLaren		Art Friedman
	Chief Executive Officer		Director
	October 1, 2014		October 1, 2014

Zoned Properties, Inc.   16624 N. 90^th Street, Suite #101 Scottsdale, AZ 85260 (877) 360-8839 Art Friedman   3519 Palais Terrace Wellington, Florida 33449 (954) 425-2090

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EX-10.5

Exhibit 10.5

 

Board Member Agreement

THIS BOARD MEMBER AGREEMENT ("Agreement") is made effective the 1st day of August, 2014, by and between Zoned Properties, Inc., a Nevada corporation ("The Company"), and Irvin Rosenfeld, an individual resident of the State of Florida ("The Director").

WHEREAS, the Company is engaged as a lessor of land, facilities and equipment to the medical marijuana industry (the “Business”).

WHEREAS, the Company has established a Board of Directors to assist the Company in its endeavors to manage the Business so as to maximize returns for the Company’s shareholders; and

NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be legally bound, the parties hereto hereby declare and agree as follows:

1. Term. The term of this Agreement shall commence on the date hereof (the “Effective Date”), and shall continue until the Director no longer serves on the Company’s Board of Directors (the “Term”), it being understood that the Director shall remain on the Company’s Board of Directors at the discretion of the Company’s shareholders.

2. Compensation.

a. Director's Fees. In consideration of the services to be rendered under this Agreement as a member of the Board of Directors and for serving on various committees of the Board of Directors, Director shall receive annual compensation of 10,000 Shares of common stock in the form of Company Stock Option package.

i. If the Director does not complete a full year of service, compensation will be pro-rated based on the term served (Ex. 6 months of service Director will receive 5,000 share of ZDPY common stock).

b. Expenses. The Company shall reimburse Director for all reasonable business expenses incurred in the performance of his duties hereunder in accordance with Company's expense reimbursement guidelines.

c. Indemnification. Company will indemnify and defend Director and hold Director harmless against any liability incurred in the performance of Director’s service on the Board of Directors pursuant to this Agreement (the “Services”) to the fullest extent authorized in Company's Certificate of Incorporation, as amended, bylaws, as amended, applicable law and as provided in any individual indemnification agreements the Company many enter into with the Director. Company has or will in a timely manner purchase Director's and Officer's liability insurance, and Director shall be entitled to the protection of any insurance policies the Company maintains for the benefit of its Directors and Officers against all costs, charges and expenses in connection with any action, suit or proceeding to which he may be made a party by reason of his affiliation with Company, its subsidiaries, or affiliates or Director’s Services hereunder.

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3. Termination.

a. Right to Terminate. At any time, Director may be removed as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Director may resign as Director as provided in Company's Certificate of Incorporation, as amended, bylaws, as amended, and applicable law. Notwithstanding anything to the contrary contained in or arising from this Agreement or any statements, policies, or practices of Company, neither Director nor Company shall be required to provide any advance notice or any reason or cause for termination of Director's status, except as provided in Company's Certificate of Incorporation, as amended, Company's bylaws, as amended, and applicable law.

b. Effect of Termination as Director. Upon a termination of Director's status as a Director, this Agreement will terminate; Company shall pay to Director all compensation to which Director is entitled up through the date of termination. Thereafter, all of Company's obligations under this Agreement shall cease.

4. Non−Disclosure, Ownership of Intellectual Property

a. Director covenants and undertakes that, during the term of this Agreement and thereafter, absent the Company’s prior written consent, all information, written or oral, relating to the Company, its parents, subsidiaries or affiliates, the Company’s Business or condition (actual or planned), disclosed to him by the Company, or which otherwise became known to him in connection with the performance of the Services (the “Information”), shall be maintained by him in full and absolute confidence, and he shall not use such Information, directly or indirectly, in whole or in part, for his own benefit or any purpose whatsoever except as specifically and explicitly provided hereunder. Director’s undertaking hereunder shall not apply to Information which is in, or becomes part of, the public domain, or which was known by Director before the time of disclosure.

b. Director agrees and undertakes that, so long as this Agreement is in effect and for a period of one year thereafter, neither he, nor any entity in which he holds a majority of the equity interest or voting control (either directly or through other entities in which he holds a majority of the equity interest or voting control) (each a “Controlled Entity”), shall not engage as a lessor of land, facilities and equipment to the medical marijuana industry (such activities, the “Competing Activities”). The Company acknowledges that Director has ownership interests in or other relationships with entities that are not Controlled Entities (each a “Non−Controlled Entity”), and the restriction in the preceding sentence does not apply to activities of Non−Controlled Entities. However, Director agrees to inform the Company at such time as the Non−Controlled Entity commences Competing Activities, provided that he is aware of the Competing Activities and the disclosure would not violate a non−disclosure agreement with the Non−Controlled Entity.

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5. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to the matters referred to herein, and no other arrangement, understanding or agreement, verbal or otherwise, shall be binding upon the parties hereto. This Agreement may not be assigned by any of the parties hereto, and may not be amended or modified, except by the written consent of both parties hereto. No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof. Headings to Sections herein are for the convenience of the parties only, and are not intended to be or to affect the meaning or interpretation of this Agreement. The Parties shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Parties may have for the breach of this Agreement. In the event that any covenant, condition or other provision contained in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, the same shall be deemed severable from the remainder thereof, and shall in no way affect, impair or invalidate any other covenant, condition or other provision therein contained. If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent permitted by law. All notices required to be delivered under this Agreement shall be effective only if in writing and shall be deemed given when received by the party to whom notice is required to be given and shall be delivered personally, or by registered mail to the addresses set forth above. The parties agree that any suit, action or proceeding between Director (and his attorneys, successors, and assigns) and the Company (and its affiliates, shareholders, directors, officers employees, members, agents, successors, attorneys, and assigns) relating to the Services or the termination of those Services shall be brought in either the United States District Court in an Arizona state court in the county of Maricopa and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of this section shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. This Agreement shall be construed and interpreted in accordance with the laws of the State of Arizona.

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IN WITNESS WHEREOF, the undersigned do hereby execute this Consent to Action to be effective as of August 1, 2014.

Company		Director
By	/s/ Bryan McLaren	By	/s/ Irvin Rosenfeld
Date	8/1/14	Date	8/1/14
	Bryan McLaren		Irvin Rosenfeld
	Chief Executive Officer		Director
	August 1, 2014		August 1, 2014

Zoned Properties, Inc.   16624 N. 90^th Street, Suite #101 Scottsdale, AZ 85260 (877) 360-8839  Irvin Rosenfeld   1451 W. Cypress Creek Rd. Fort Lauderdale, FL 33309 (954) 536-9011

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EX-10.6

Exhibit 10.6

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - GROSS

1.            Basic Provisions ("Basic Provisions").

1.1       Parties: This Lease ("Lease"), dated for reference purposes only April 1, 2015, is made by and between Zoned Properties, Inc. an Arizona Corporation ("Lessor") and Tech Group North America, Inc. an Arizona Corporation ("Lessee"), (collectively the "Parties", or Individually a "Party").

1.2(a)  Premises: That certain portion of the project (as defined below), including all improvements therein or to be provided by Lessor located in the city of Tempe, county of Maricopa, State of Arizona, with zip code 86281, as outlined in "Exhibit A" attached hereto ("Premises") and generally described as: 422 S. Madison Dr., Suites 1, 2, 3, 4 and 5, Tempe, AZ 85281 and consisting of approximately 22,355 rentable square feet (100% of building). In addition to Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to any utility raceways of the building containing the Premises ("Building") and to the Common Areas (as defined in Paragraph 2.6 below), but shall not have any rights to the roof, or exterior walls of the building or to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with any other buildings and improvements thereon, are herein collectively referred to as the "Project."

1.2(b)  Parking: N/A unreserved vehicle parking spaces.

1.3      Term: sixty (60) months ("Original Term") commencing on April 1, 2015 ("Commencement Date") and expiring on March 31, 2020 ("Expiration Date").

1.4      Early Possession: N/A ("Early Possession Date").

1.5      Base Rent: The Base Rent shall be $0.7159 psf per month plus CAM, property taxes, insurance and applicable rental taxes and shall increase annually per the schedule below ("Base Rent") payable on the first day of each month.

				Base Rent	Base Rent/	Base Rent/
Year	Mos.	From	To	PSF/Month	Month	Year
1	12	4/1/2015	3/31/2016	$0.7159	$16,003.95	$192,047.32
2	12	4/1/2016	3/31/2017	$0.7374	$16,484.58	$197,814.92
3	12	4/1/2017	3/31/2018	$0.7595	$16,978.62	$203,743.46
4	12	4/1/2018	3/31/2019	$0.7823	$17,488.32	$209,859.79
5	12	4/1/2019	3/31/2020	$0.8058	$18,013.66	$216,163.90

1.6      Lessee's Share of Common Area Operating Expenses: 27.14% ("Lessee's Share"). In the event that the size of the Premises and/or the Project are modified during the term of this Lease, Lessor shall recalculate Lessees Share to reflect such modification.

1.7     Base Rent and Other Monies Paid Upon Execution:

(a)         Base Rent: $16,003.95.

(b)         Common Area Operating Expenses: $1,546.22.

(c)         Rental Tax (2.3%): $368.09

(d)         Security Deposit: Tenant to pay an additional security deposit of $13,000.00. Landlord currently holding a security deposit of $3,135.60. Total security deposit to be $16,135.60.

(e)         Total Due Upon Execution of this Lease: $30,918.26

1.8      Agreed Use: Warehousing of plastic resin, production parts and related uses for a plastics injection mold business.

1.9      Insuring Party: Lessor is the "Insuring Party".

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1.10    Real Estate Brokers: The following real estate brokerage relationships exist in this transaction (the "Brokers"): TCT Commercial represents Lessor exclusively ("Lessor's Broker") and N/A represents Lessee exclusively ("Lessee's Broker"). Upon execution and delivery of the Lease by both Parties, Lessor shall pay the Brokers for the brokerage services rendered by the Brokers the fee agreed to in a separate written agreement.

1.11    Guarantor. N/A.

1.12    Exhibits. Attached hereto are the following, all of which constitute a part of the lease:

 Addendum to Lease

 Exhibit A — Premises

 Exhibit B —Work Letter

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. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different.

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 6.1(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, that the structural elements of the roof, bearing walls and foundation of the Premises shall be free of material defects, and that the Premises does not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with such warranty exists as of the Start Date, or if one of such systems or elements should malfunction or fall 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 Lessor's 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 Premises. 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 (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls). Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting the Premises.

2.3      Compliance. Lessor warrants that to the best of its knowledge the improvements on the Premises and the Common Areas 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, or to any Alterations or Utility Installations (as defined in Paragraph 6.3(a)) made or to be made by Lessee. 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 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 the 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.

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(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 shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, 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 falls 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 have any right to terminate this Lease.

2.4      Acknowledgements. Lessee acknowledges that: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and 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, (c) 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, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein, and (f) 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      Vehicle Parking. Lessee shall be entitled to use the number of Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles." Lessor may regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.8. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lessor. In addition:

(a)       Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.

(b)      Lessee shall not service or store any vehicles in the Common Areas.

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(c)      If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.5, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or two away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.6      Common Areas - Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

2.7      Common Areas - Lessee's Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor's designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.8      Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project.

2.9      Common Areas - Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time:

(a)       To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b)       To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

(c)       To designate other land outside the boundaries of the Project to be a part of the Common Areas;

(d)       To add additional buildings and improvements to the Common Areas;

(e)       To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and

(f)       To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be appropriate. The foregoing common area changes shall not impair Lessee's access to or use of the Premises.

3.            Term.

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

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3.2      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 or change the Expiration Date. 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 90 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by notice in writing within 10 days after the end of such 90 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.

3.3      Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance, 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.

4.            Rent.

4.1.     Rent Defined. All 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.     Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent, Lessee's Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in accordance with the following provisions:

(a)      The following costs relating to the ownership and operation of the Project are defined as "Common Area Operating Expenses":

(i)        Costs relating to the operation, repair and maintenance, in neat, clean, good order and condition, but not the replacement (see subparagraph (e)), of the following:

(aa)    The Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems.

(bb)   Exterior signs and any tenant directories.

(cc)   Any fire sprinkler systems.

(dd)   All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant.

(ii)       The cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered.

(iii)      The cost of trash disposal, pest control services, property management, security services, owner's association dues and fees, the cost to repaint the exterior of any structures and the cost of any environmental inspections.

(iv)      Any increase above the Base Real Property Taxes (as defined in Paragraph 9).

(v)       Any "Insurance Cost Increase" (as defined in Paragraph 7).

(vi)      Any deductible portion of an insured loss concerning the Building or the Common Areas.

(vii)     Auditors', accountants' and attorneys' fees and costs related to the operation, maintenance, repair and replacement of the Project.

(viii)    The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such capital improvement over a 12 year period end Lessee shall not be required to pay more than Lessee's Share of 1/144th of the cost of such capital improvement in any given month. The cost of such improvement shall be capitalized under GAAP and amortized over the useful life of such improvements and the annual amortization shall be deemed an operating expense in each of the calendar years during which the cost of the improvement is amortized.

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(ix)       The cost of any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense.

(b)      Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Unit, the Building or to any other building In the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Premises, Building, or other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project.

(c)      The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.

(d)      Lessee's Share of Common Area Operating Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount of such payments shall be based on Lessor's estimate of the annual Common Area Operating Expenses. Within 60 days after written request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses for the preceding year. If Lessee's payments during such year exceed Lessee's Share, Lessor shall credit the amount of such over-payment against Lessee's future payments. If Lessee's payments during such year were less than Lessee's Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement.

(e)      Common Area Operating Expenses shall not include the cost of replacing equipment or capital components such as the roof, foundations, exterior walls or Common Area capital improvements, such as the parking lot paving, elevators, fences that have a useful life for accounting purposes of 5 years or more. In addition, Capital Improvements shall only be included in Operating Expenses if the cost of any improvement made to the Project during any calendar year is necessary to comply with a legal requirement not existing as of the Commencement Date or if such improvement will reduce Operating Expenses (i.e. a labor saving improvement) or enhance services.

(f)       Common Area Operating Expenses shall not include any expenses paid by any tenant directly to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant, or insurance proceeds.

(g)      Lessee shall have the right to inspect or audit Lessor's books and records of Operating Expenses during the term of the Lease.

4.3      Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. In the event that any statement or invoice prepared by Lessor is inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth 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 lime designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessors 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 $100.00 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and attorney's fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.

5.            Use.

5.1      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. Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. 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 Building or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Project. 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.

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5.2      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.

(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 (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project 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.

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(e)      Lessor Indemnification. Except as otherwise provided in paragraph 7.7, 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 suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by 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 taking possession, unless such remediation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph 6.3(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 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 5.2(d) and Paragraph 12), 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.

5.3      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 such Requirements, without regard to whether said 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 sit 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. Likewise, Lessee shall immediately give written notice to Lessor of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises.

5.4      Inspection; Compliance. Lessor and Lessor's "Lender" 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 is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority and Lessee has caused such violation, in which case Lessee shall pay For such inspection. 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 written request therefore.

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6.            Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

6.1      Lessee's Obligations.

(a)      In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 5.3 (Lessee's Compliance with Applicable Requirements), 6.2 (Lessor's Obligations), 8 (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 including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 6.2. 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 6.1(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.

(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, and (iii) clarifiers. However, Lessor resolves the right, upon notice to Lessee after a breach by Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost thereof.

(c)      Failure to Perform. If Lessee falls to perform Lessee's obligations under this Paragraph 6.1, 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 125% of the cost thereof.

(d)      Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 7.7 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 6.1(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 (le. 1/144th of the cost per month). Lessee shall pay interest on the unamortized balance but may prepay its obligation at any time.

6.2      Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

6.3      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 6.4(a).

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(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 Alterations or 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, FIVAC, and/or life safely 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.

(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 et 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.

6.4      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 6.4(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 also remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) to the level specified in Applicable 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 6.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

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7.            Insurance; Indemnity.

7.1     Payment of Premium Increases.

(a)     As used herein, the term "Insurance Cost Increase" is defined as any increase in the actual cost of the insurance applicable to the Building and/or the Project and required to be carried by Lessor, pursuant to Paragraphs 7.2(b), 7.3(a) and 7.3(b), over and above the Base Premium, as hereinafter defined, calculated on an annual basis. Insurance Cost Increase shall include, but not be limited to, requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building and/or Project, and/or a general premium rate increase. The term Insurance Cost Increase shall not, however, include any premium increases resulting from the nature of the occupancy of any other tenant of the Building. The "Base Premium" shall be the annual premium applicable to the 12 month period Immediately preceding the Start Date. If, however, the Project was not insured for the entirety of such 12 month period, then the Base Premium shall be the lowest annual premium reasonably obtainable for the Required Insurance as of the Start Date, assuming the most nominal use possible of the Building. In no event, however, shall Lessee be responsible for any portion of the premium cost attributable to liability Insurance coverage in excess of $2,000,000 procured under Paragraph 7.2(b).

(b)     Lessee shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph 4.2. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date.

7.2      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. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional insured-Managers or Lessors of Premises" Endorsement. 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. Lessee shall provide an endorsement on Its liability policy(les) which provides that Its Insurance 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 7.2(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.

7.3     Property insurance • Building, Improvements and Rental Value.

(a)      Building and Improvements. Lessor shall obtain and keep in force a policy or policies of insurance 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 insurable replacement cost of the Building and Common Areas, 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. Lessee Owned Alterations and Utility installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not 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 Building and Common Areas 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 $5,000 per occurrence.

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(b)     Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Project if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.

(c)      Lessee's improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease.

7.4     Lessee's Property; Business Interruption Insurance; Worker's Compensation 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.

(b)     Worker's Compensation Insurance. Lessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a Waiver of Subrogation' endorsement. Lessee shall provide Lessor with a copy of such endorsement along with the certificate of Insurance or copy of the policy required by paragraph 7.5.

(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.

7.6    Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders Rating" of at least A-, VII, as set forth in the moat 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 with copies of the required endorsements 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 10 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.

7.6      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.

7.7      Indemnity. Except for gross negligence or willful misconduct, each party shall indemnify, protect, defend and hold harmless the other party 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 tens and provisions of this Lease. If any action or proceeding is brought against a party by reason of any of the foregoing matters, the other party shall upon notice defend the same at the other party's expense by counsel reasonably satisfactory to each party and shall cooperate with the other party in such defense. Neither party need not have first paid any such claim in order to be defended or indemnified.

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7.8      Exemption of Lessor and its Agents from Liability. Unless caused by the negligence or willful misconduct of Lessor or Its agents, neither Lessor nor its agents shall be liable for. (I) 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, indoor air quality, the presence of mold 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, or from other sources or places, (II) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or Its agents to enforce the provisions of any other lease in the Project, or (ill) injury to Lessee's business or for any loss of Income or profit therefrom. Instead, it is intended that Lessee's recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 7.

8.        Damage or Destruction.

8.1      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 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal to 6 month's Base Rent. 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 improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. 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 7.3(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 depredation.

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

8.2      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;

8.3     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 (subject to reimbursement pursuant to Paragraph 4.2), 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.

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8.4     Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate 80 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the light to recover Lessor's damages from Lessee, except as provided in Paragraph 7.6.

8.6     Damage Near End of Term. If at any time during the last 6 months of this Lease there is a partial Premises damage for which the cost to repair exceeds six (6) month's Base Rent, 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, exercising such option (I) on 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, 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, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished.

8.6      Abatement of Rent; Lessee's Remedies.

(a)      Abatement. in the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition, 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. 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 is 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. Lessee shall have the right to terminate this Lease upon a casualty to the Premises rendering fifty percent (50%) or more of the Premises untenable or upon a casualty to the Building or the Common Areas preventing the Lessee from accessing the Premises, if the Lessor has not commenced repairs within ninety (90) days of such occurrence.

8.7      Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 5.2(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.            Real Property Taxes.

9.1      Definitions.

(a)      "Real Property Taxes." 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 Project, Lessor's right to other income therefrom, and/or Lessor's business of teasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Project 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 Project is located. The term "Real Property Taxes" shall also Include any tax, fee, levy, assessment or charge, or any increase therein: (I) a change in the improvements thereon, and/or (Ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

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(b)      "Base Real Property Taxes." As used herein, the term "Base Real Property Taxes" shall be the amount of Real Property Taxes, which are assessed against the Premises, Building, Project or Common Areas in the calendar year during which the Lease is executed. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common.

9.2      Payment of Taxes. Except as otherwise provided in Paragraph 9.3, Lessor shall pay the Real Property Taxes applicable to the Project, and said payments shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

9.3      Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessors records and work sheets as being caused by additional improvements placed upon the Project by other tenants or by Lessor for the exclusive enjoyment of such other Tenants. Notwithstanding Paragraph 9.2 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties.

9.4      Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building 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 determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive.

9.5      Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises. 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.

10.      Utilities and Services. Lessee 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. Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessors sole judgment, Lessor determines that Lessee is using a disproportionate amount of water, electricity or other commonly metered utilities, or that Lessee is generating such a large volume of trash as to require an increase in the size of the trash receptacle and/or an Increase in the number of times per month that it is emptied, then Lessor may increase Lessee's Base Rent by an amount equal to such increased costs. 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.

11.           Assignment and Subletting.

11.1    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, not to be unreasonably withheld.

(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 26% or more of the voting control of Lessee shall constitute a change in control for this purpose.

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(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 26% 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 Lessors option, be a Default curable after notice per Paragraph 12.1(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: (Ii 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 11.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.

(f)        Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the lime consent is requested.

(g)       Notwithstanding the foregoing, allowing a de minimis portion of the Premises, le. 20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting.

(h)       Subject to the terms and conditions of the paragraph 11.1, Lessee shall be permitted to transfer the Lease to an affiliated entity, so long as the affiliates net worth is equal to or greater than the Lessee.

11.2    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 Lessors right to exercise its remedies for Lessee's Default or Breach.

(c)       Lessors 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 Lessors 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 Lessors 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 Lessors considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested.

(f)       Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, 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.

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(g)      Lessors 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.

11.3    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 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 then outstanding 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 to right to inquiries 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.

12.          Default; Breach; Remedies.

12.1    Default; Breach. A "Default” is defined as a failure by the Lessee to comply with or perform any of the terms, convenants, 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 7.3 is Jeopardized as a result thereof, or without providing reasonable thereof, or without providing reasonable assurances to minimize potential vandalism.

(b)       The failure of Lessee to make a 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 the Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

(c)       The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an Illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the event that Lessee commits waste, a nuisance or an illegal activity a second time, then the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.

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(d)       The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the subordination, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any 7 guaranty and/or Guarantor, (vii) any document requested under Paragraph 40, (viii) material data safety 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.

(e)       A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2,8 hereof, other than those described in subparagraphs 11.1(a), (b), (c), or (d), 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.

(f)       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 is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

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

(h)       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 exist at the time of execution of this Lease.

12.2    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 116% 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 bill 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 any damages to which Lessor is otherwise entitled. 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 12.1 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 12.1. In such case, the applicable grace period required by Paragraph 12.1 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.

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(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.

12.3    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 late charge equal to 10% of each such overdue amount or $100, whichever is greater plus $25.00 per day for each day late after five (6) days. 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.

12.4    Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear Interest from the 31st day after it was due. 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 12.4.

12.6    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 to 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, reserving Lessee's right to reimbursement from Lessor for any such expense in excess of such offset. Lessee shall document the cost of said cure and supply said documentation to Lessor.

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13.           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 floor area of the Unit, or more than 25% of the parking spaces 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 paid by the condemnor 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 end 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.

14.           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 AIR Commercial 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 fall 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.

16.           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. 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.

16.           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.

17.           Days. Unless otherwise specifically Indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days.

18.           Limitation on Liability. The obligations of Lessor under this Lease shall not 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 not seek recourse against Lessor's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.

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19.         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,

20.         No Prior or Other Agreements. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shell be effective. Lessor and Lessee each represents and warrants to the other 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 Loose end 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.

21.           Notices.

21.1    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 Mall, with postage prepaid, or by facsimile transmission or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 21. 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.

21.2    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 mall the notice shall be deemed given 72 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 guarantees 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 by email shall be deemed delivered upon telephone confirmation of receipt (if by fax, a confirmation report from fax machine is sufficient), provided a copy is also delivered via delivery or mall. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

22.          Waivers.

(a)      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

(b)      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 monies 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.

(c)      THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

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23.          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.

(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’s only. In these situations, the agent is not the Lessors 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 end Lessee. A real estate agent, either acting directly or through one or more associate licensee, 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 end 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.

24.         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. Holdover Base Rent shall be calculated on monthly basis. Nothing contained heroin shall be construed as consent by Lessor to any holding over by Lessee.

26.           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.

27.          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.

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28.           Subordination; Attornment; Non-Disturbance.

28.1    Subordination. This Lease and any Option granted hereby shall be subject end subordinate to any ground lease, mortgage, dead 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.

28.2    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 28, attorn to such new owner, and upon request, enter Into a new lease, containing all of the terms and provisions of !his Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations, 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 months rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.

28.3    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, if requested by Lessee, 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 or a Non-Disturbance Agreement.

28.4    Self-Executing. The agreements contained in this Paragraph 28 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.

29.           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.)

30.         Lessor's Access; Showing Premises; Repairs. Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, 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 on Lessee's use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.

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31.           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.

32.           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 which may be placed only on the Premises, Lessee shall not place any sign upon the Project without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.

33.           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.

34.          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 lime of such consent. The failure to specify herein any particular condition to Lessors 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.

35.           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.

36.           Options. If Lessee is granted any option, as defined below, then the following provisions shall apply.

38.1    Definition. "Option" shall mean: (a) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of 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, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Lessor.

38.2    Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee or a permitted affiliate, and cannot be assigned or exercised by anyone other than said original Lessee or a permitted affiliate 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.

38.3    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.

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36.4    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 37.4(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 falls 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.

37.          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.

38.           Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably Interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate such rights.

39.           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 assorted 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. A Party who does not initiate suit for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived its right to protest such payment.

40.           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.

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

42.          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.

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43.           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.

44.           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.

45.           Accessibility; 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

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

OWNER:		TENANT:
Zoned Properties Inc., an Arizona Corporation		Tech Group North America Inc., an Arizona Corporation
By:	/s/ Bryan McLaren	By:	/s/ Michael Treadaway
Name	Bryan McLaren	Name:	Michael Treadaway
Title:	President	Title:	President
Date:	7/1/2015	Date:	29 JUN 2015

26

EXHIBIT A

PREMISES

 

27

EXHIBIT B

WORK LETTER

Landlord to convey and Tenant to accept the Premises in an “as-is” condition.

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EX-10.7

Exhibit 10.7

LICENSED CULTIVATION PROJECT

ZONED PROPERTIES, INC. NNN LEASE AGREEMENT

CHINO VALLEY PROPERTIES, LLC

(Landlord)

&

CCC HOLDINGS, LLC

(Tenant)

DATED: August 6, 2015

TABLE OF CONTENTS

LICENSED MARIJUANA CULTIVATION FACILITY	5
LICENSED MARIJUANA PROJECT COMPLIANCE AGREEMENT	6
ARTICLE 1: RECITALS	7
1.01 Defined Lease Agreement Terms	7
ARTICLE 2: PREMISES AND COMMON AREAS LEASED	8
2.01 Premises	8
ARTICLE 3: COMPLIANCE WITH LAW; AS IS	8
3.01 Compliance with Law; AS IS	8
ARTICLE 4: LEASE TERM	9
4.01 Lease Commencement.	9
ARTICLE 5: RENTAL PAYMENTS	9
5.01 Base Rent	9
5.02 Additional Rent	10
5.03 Late Payment	10
5.04 Prepaid Rent	10
5.05 Security Deposit	11
ARTICLE 6: ADDITIONAL RENT AND CHARGES	11
6.01 Real Property Taxes	11
6.02 Tenant's Personal Property Taxes	12
6.03 Rental Taxes	12
ARTICLE 7: INSURANCE	13
7.01 Tenant's Insurance	13
7.02 Form of Insurance Certificates	14
7.03 Tenant's Failure	14
7.04 Waiver of Subrogation	14
7.05 Tenant's Properties and Fixtures	15
7.06 Indemnification	15
7.07 Damage to Tenant's Property	16
ARTICLE 8: REPAIRS AND MAINTENANCE	17
8.01 Landlord Repairs and Maintenance	17
8.02 Utilities and Services	17
8.03 Tenant Repairs and Maintenance	18
8.04 Non-liability of Landlord	18
8.05 Inspection of Premises	18

2

ARTICLE 9:  FIXTURES, PERSONAL PROPERTY ALTERATIONS	19
9.01 Fixtures and Personal Property	19
9.02 Alterations	20
9.03 Liens	21
ARTICLE 10: USE AND CONFLUENCE WITH APPLICABLE LAW	21
10.01 Premises Use and Confluence with Applicable Law	21
10.02 Hazardous Materials	22
10.03 Signs	24
ARTICLE 11: DAMAGE AND DESTRUCTION	24
11.01 Reconstruction	24
11.02 Excessive Damage or Destruction	24
11.03 Uninsured Casualty	25
11.04 Waiver	25
11.05 Mortgagee's Right	25
11.06 Damage Near End of Term	25
ARTICLE 12: EMINENT DOMAIN	26
12.01 Condemnation & Eminent Domain	26
ARTICLE 13:  DEFAULT	26
13.01 Events of Default	26
13.02 Remedies	27
13.03 Landlord's Default	29
ARTICLE 14:  FILING OF PETITION	29
14.01 Tenant's Bankruptcy	29
ARTICLE 15: ASSIGNMENT AND SUBLETTING	31
15.01 Prohibition	31
15.02 Excess Rental	31
15.03 Scope	31
15.04 Waiver	32
15.05 Change in Control	32
ARTICLE 16:  ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION	32
16.01 Estoppel Certificate	32
16.02 Attornment	33
16.03 Subordination	33
16.04 Recording	33
ARTICLE 17: MISCELLANEOUS	34
17.01 Notices	34
17.02 Successors Bound	34
17.03 Waiver	34
17.04 Subdivision and Easements	34
17.05 Landlord's Reserved Rights in Common Areas	35
17.06 Accord and Satisfaction	35
17.07 Limitation of Landlord's and Tenant's personal liabilities	35
17.08 Survival	35
17.09 Attorneys' Fees	36

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17.10 Captions and Article Numbers	36
17.11 Severability	36
17.12 Governing Law, Dispute Resolution and Venue	36
17.13 Submission of Lease	37
17.14 Holding Over	37
17.15 Parking	38
17.16 Quiet Enjoyment	38
17.17 Broker; Agency Disclosure	38
17.18 Landlord's Right to Perform	38
17.19 Assignment by landlord	39
17.20 Entire Agreement	39
17.21 Guarantor	40
17.22 Exhibits	40
17.23 Time	40
17.24 Prior Agreement or Amendment	40
17.25 Excused Delays	40
17.26 Authority to Bind Tenant	41
17.27 Interpretation	41
17.28 Patriot Act Compliance	41
EXHIBIT A: LEASE COMMENCEMENT	45
EXHIBIT B: RENTAL PAYMENT SCHEDULE	46
EXHIBIT C: PROPERTY SITE AND LEGAL DESCRIPTION	47
EXHIBIT D: TENANT OPTION TO EXTEND LEASE TERM AND FIRST RIGHT	48
EXHIBIT E: GUARANTY OF PAYMENT AND PERFORMANCE	49

4

LICENSED MARIJUANA CULTIVATION FACILITY

TRIPLE NET (NNN) LEASE AGREEMENT 

This LEASE ("Lease" or “Lease Agreement”) dated, August 1, 2015, is made by and between Chino Valley Properties, LLC, an Arizona limited liability company ("Landlord" or “Lessor”), and CCC Holdings, LLC ("Tenant" or “Lessee”).

Net, Net, Net Lease. Tenant understands and agrees that this Lease is what is commonly referred to as a “Net, Net, Net” Lease, NNN, or triple net lease. Tenant recognizes and acknowledges, without limiting the generality of any other terms or provisions of this lease, that it is the intent of the parties hereto that any and all rentals in this lease provided to be paid be Tenant to Landlord, shall be net to the Landlord, and any and all expenses incurred in connection with the Common Areas, the Premises, and the Center or in connection with the operations thereon, including any and all taxes, assessments, general or special, license fees, insurance premiums, public utility bills, management and administrative fees and costs of repair, maintenance and operation of the Common Areas, the Premises, and the Center and all buildings, structures, permanent textures and other improvements comprised therein, together with the appurtenance thereto, shall be paid by Tenant. 

In the event that the Landlord is specifically advised in writing by any federal, state or local government that Landlord is subject to seizure of its property, if it does not terminate Tenant’s right to cultivate marijuana upon the Leased Premises, or if the Arizona Medical Marijuana Act (AMMA) is declared to be unenforceable or is modified to prohibit the sale or cultivation of medical marijuana upon the Leased Premises, or if any other zoning regulation, rule or regulation is modified to prohibit sale, cultivation or possession of marijuana upon the Leased Premises, Landlord may terminate this Lease at its sole discretion.

5

LICENSED MARIJUANA PROJECT COMPLIANCE AGREEMENT 

1. Lessee acknowledges that neither the lessor nor lessor’s representatives have made any oral or written representations or warranties whatsoever concerning the suitability or zoning of the property with respect to its potential use as a medical marijuana facility, and that it is the sole responsibility of the Lessee to investigate and to satisfy itself concerning the suitability of the property for such use.

2. Lessee understands and agrees that Lessee, and not Lessor, shall be solely responsible at the Lessee’s own expense for full compliance with all state and local laws, rules, regulations and ordinances pertaining to the maintenance and/or operation of a medical marijuana cultivation facility.

3. Lessee warrants and represents that it is eligible and qualified to operate a medical marijuana facility in the property under all applicable state and local laws rules, regulations and ordinances, and that Lessee has obtained all legally required licenses, permits, and approvals to do so before commencing operations on the property.

4. Lessee shall indemnify, defend and hold harmless Lessor, its trustees, agents, employees, and lenders from and against all damages, liabilities, judgments, claims, expenses, penalties, and attorney and consultant fees arising out of or connected in any way to Lessee’s violation or alleged violation of any federal, state, or local law, rule, regulation or ordinance, whether or not litigation or prosecution is actually commences against Lessor, its trustees, agents, employees or lenders. 

5. Lessee shall provide notice to Lessor immediately in the event of the revocation, suspension, expiration, transfer, or surrender of Lessee’s lawful authority to operate a medical marijuana facility. Such revocation, suspension, expiration, transfer or surrender, or Lessee’s failure to provide immediate notice thereof to Lessor, shall constitute an incurable Breach of the Lease entitling Lessor at its sole discretion to terminate the lease agreement.

LANDLORD:		TENANT:
Chino Valley Properties, LLC		CCC Holdings, LLC
By	/s/ Bryan McLaren	By	/s/ Alan Abrams
Its	Duly Authorized Agent	Its	Its Duly Authorized Agent

6

ARTICLE 1: RECITALS

1.01 Defined Lease Agreement Terms

WHEREAS, The following terms shall have the meanings specified in this Section, unless otherwise specifically provided. Other terms may be defined in other parts of the Lease. 

(A) Landlord	Chino Valley Properties, LLC
(B) Landlord’s Address	Chino Valley Properties, LLC c/o Zoned Properties, Inc. 14300 N. Northsight Blvd #208 Scottsdale, Arizona 85260
(C) Tenant	CCC Holdings, LLC
(D) Tenants Address	CCC Holdings, LLC c/o AC Management Group, LLC 7950 E. Acoma Dr. #204 Scottsdale, Arizona 85260
(E) Tenant Use	Marijuana cultivation and processing in accordance with the laws of the State of Arizona, applicable licensure requirements, and the regulations and uses incidental thereto
(F) Building & Premises	Chino Valley Cultivation Site; approximately 10,000 square feet of completed Greenhouse and approximately 5,000 square feet of office & garage space as described in Exhibit C
(G) Property	Real Property described in Exhibit C
(H) Term	Two Hundred Forty (240) Months commencing as of the Commencement Date described in the attached Exhibit A
(I) Commencement Date	Exhibit A
(J) Base Rent	Exhibit B
(K) Prepaid Rent	None
(L) Security Deposit	$40,000
(M) Landlord Broker	None
(N) Tenant Broker	None

7

ARTICLE 2: PREMISES AND COMMON AREAS LEASED

2.01 Premises

(a) Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from landlord, subject to the provisions of this Lease, certain premises described in Exhibit C (the "Buildings" or the “Premises”) owned by Landlord. The Site Plan for the Project attached to this Lease as Exhibit C is attached for general reference purposes only and shall not constitute a representation or warranty by Landlord to be the final plan of the Project or Building, location of the Building, or to require Landlord to build any improvements, or to otherwise comply with the site plan or require Landlord to lease space to a particular tenant or type of tenant.

(b) Measurement of Premises. The terms "Rentable Area of the Premises," "rentable square feet," "actual square footage" and words of similar importance (whether or not spelled with initial capitals) as used in this Lease will be defined as the total floor area constituting the Premises as measured from the unfinished outside of the exterior Building walls to the unfinished outside of like exterior Building walls. "Rentable Area of the Premises" shall also include any mezzanine space as measured from the outside of the exterior Building walls to like outside exterior Building walls and from outside exterior Building walls to the termination of the mezzanine deck. Tenant acknowledges that, except as otherwise expressly set forth in this Lease Agreement, neither Landlord nor any agent, property manager or broker of Landlord has made any representation or warranty with respect to the Premises, the Building, the Common Areas or the Project or their suitability for the conduct of Tenants business.

ARTICLE 3: COMPLIANCE WITH LAW; AS IS 

3.01 Compliance with Law; AS IS

Tenant accepts the Premises strictly on an “AS IS” basis, without any representations or warranties from Landlord. Tenant agrees to be compliant with all applicable rules/laws/regulations in effect, or subsequently passed into effect, as of and after the Commencement Date.

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Tenant, at its sole cost and expense, shall promptly observe and materially comply with all present and future laws, orders, regulations, rules, ordinances and requirements of any governmental agency with respect to the use, care and control of the Premises. Without limiting the generality of the foregoing, Tenant shall make any structural changes or additions to the Premises that are required, in order to comply with the requirements of its business operations. Landlord makes no representations or warranties to Tenant, and hereby disclaims any and all representations or warranties to Tenant, concerning the Premises, including without limitation, that as of the Commencement Date the Premises are (a) in compliance with all federal, state and local laws, regulations and directives for Tenant's intended use of the Premises, including without limitation the Environmental Laws, but excluding the Americans With Disabilities Act; and (b) free from and of all hazardous materials, including without limitation asbestos, lead paint and polychlorinated biphenyl; provided that Landlord represents and warrants to Tenant that Landlord has no actual knowledge, without having made any investigation or inquiry, of any present violation by the Premises of any of the Environmental Laws. "Environmental Laws" shall include, but not be limited to, the Resource, Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq.; the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 201,300f to j-9 and any and all environmental laws of the State of Arizona and any and all amendments to such Environmental Laws. Tenant agrees to hold harmless Landlord, and hereby waives all rights and claims of contribution against Landlord, with respect to any violations or alleged violations of Environmental Laws or any other federal, state and local laws, regulations and directives concerning the Premises which arise as a result of Tenant’s activities at the Premises. 

ARTICLE 4: LEASE TERM

4.01 Lease Commencement.

The duration of the period of this Lease (the “Term”) shall commence on the date of delivery of possession of the Premises (the "Lease Commencement Date") as outlined in Exhibit A and shall, subject to the right of the Tenant reserved hereunder to extend that duration, run for a period of two hundred forty (240) months therefrom. Notwithstanding the foregoing, in the event the Landlord is delayed in the delivery of the Premises to Tenant due to a Tenant Delay, the Commencement Date shall be deemed to have occurred on the date on which the Landlord would have been able to deliver the Premises to the Tenant absent the Tenant caused delay. 

ARTICLE 5: RENTAL PAYMENTS

5.01 Base Rent

The Base Rent ("Base Rent") shall be as set forth in Exhibit B and is adjusted annually as of each Anniversary Date as defined and as set forth in Exhibit B. The Base Rent shall be paid in advance on the first day of each and every month during the Term to Landlord at the address set forth in Section 1.01 hereof or at such other place as Landlord may direct in writing, without any prior notice or demand therefor and without any abatement, deduction, offset or setoff whatsoever unless permitted by law or otherwise permitted in this lease. If the Term commences on any day other than the first day of a calendar month and/or ends on any day other than the last day of a calendar month, Base Rent for the fraction(s) of a month at the commencement and/or upon the expiration of the Term shall be prorated based upon the actual number of days in such fractional month(s). 

9

5.02 Additional Rent

In addition to Base Rent, Tenant shall pay to Landlord all sums of money or other charges required to be paid by the Tenant under this Lease (other than Base Rent and the Prepaid Rent), including but not limited to Tenant's Share of Operating Expenses (as defined in Article 6 hereof) (all such sums being herein deemed "Additional Rent''), and whether or not the same are designated "Additional Rent" the same shall be payable in lawful money of the United States of America without deduction, set-off or abatement whatsoever unless permitted by law or otherwise permitted in this lease. Any Additional Rent provided for in this Lease shall become due with the next monthly installment of Base Rent unless otherwise provided. The term "Rent" as used in this Lease, shall refer collectively to "Base Rent" and "Additional Rent."

5.03 Late Payment

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 12% of each such overdue amount plus $25 per day for each day late after five (5) days. 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.

Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day after it was due. The interest ("Interest") charged shall be computed at the rate of 12% per annum but shall not exceed the maximum rate allowed by law.

5.04 Prepaid Rent

There will be no Prepaid Rent.

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5.05 Security Deposit 

As of the parties’ execution of this Lease, Tenant shall deliver the Security Deposit in the amount of $40,000 to Landlord paid over twelve months beginning September 1, 2015 as $3,333.33 consistent with Section 1.01 as partial security for the performance by Tenant of the provisions of this Lease. In the event of any Default by Tenant under this Lease, Landlord shall have the right to apply all or any portion of the Security Deposit to cure the Default and reinstate this Lease, or to otherwise compensate Landlord for all damages sustained by Landlord resulting from or in connection with such Default. In the event of any such application of the Security Deposit by Landlord, Tenant shall upon demand deliver to Landlord the sum required to restore the Security Deposit to the amount set forth in Section 1.01. Provided that Tenant is not in Default at the expiration or termination of this Lease, Landlord shall return any remaining portion of the Security Deposit to Tenant within thirty (30) days after the date of such expiration or termination. Landlord's rights with respect to the Security Deposit are those of a trustee. Landlord shall be entitled to commingle the Security Deposit with Landlord's general funds and shall have no obligation to pay Tenant interest on the Security Deposit. In the event of a transfer of Landlord's interest in this Lease during the Term hereof, provided Landlord transfers the then unapplied Security Deposit to the transferee and the transferee agrees and actually does deposit the check to a trust account held for the sole use of this provision, Landlord shall be discharged from any further liability with respect to the Security Deposit.

ARTICLE 6: ADDITIONAL RENT AND CHARGES

6.01 Real Property Taxes

For purposes of this Lease, "Real Property Taxes" shall consist of all real estate taxes, leasehold excise taxes and all other taxes relating to the Building, the Common Areas and/or the Project, as applicable, all other taxes which may be levied in lieu of real estate taxes, all assessments, local improvement districts, assessment bonds, levies, fees and other governmental charges, including, but not limited to, charges for traffic facilities and improvements, water service studies, and improvements or amounts necessary to be expended because of governmental orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits, or any other purpose, which are assessed, levied, confirmed, imposed or become a lien upon the Building or any portion of the Project, the Property and/or the Common Areas, or become payable during the Term (or which become payable after the expiration or earlier termination hereof and are attributable in whole or in part to any period during the Term hereof), together with all costs and expenses incurred by Landlord in successfully contesting, resisting or appealing any such taxes, rates, duties, levies or assessments, "Real Property Taxes" shall exclude any franchise, estate, inheritance or succession transfer tax of Landlord, or any federal or state income, profits or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time during the Term there is levied or assessed against Landlord a federal, state or local tax or excise tax on rent, or any other tax however described on account of rent or gross receipts or any portion thereof, Tenant shall pay one hundred percent (100%) of the Tenant's Share of any said tax or excise applicable to Tenant's Rent as Additional Rent. 

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Together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the prior calendar year’s real property taxes and assessments with respect to the Premises and one-twelfth (1/12^th) of the then current calendar’s year’s association assessments and fees (if any) with respect to the Premises each month. Subject to such payment, Landlord shall pay such taxes, assessments and fees to the respective taxing authority and office association. In addition, Tenant shall pay all personal property taxes with respect to any property of Tenant or any subtenant in or upon the Premises prior to delinquency and directly to the respective taxing authority on or before the last day upon which the same may be paid without interest or penalty, and Tenant shall deliver to Landlord reasonable documentation evidencing Tenant’s compliance with the foregoing payment obligations.

6.02 Tenant's Personal Property Taxes

Tenant shall pay or cause to be paid, prior to delinquency, any and all taxes and assessments levied upon all trade fixtures, inventories and other real or personal property placed or installed in and upon the Premises by Tenant. If any such taxes on Tenant's personal property or trade fixtures are levied against Landlord or Landlord's property or if the assessed value of the Building is increased by the inclusion therein of a value placed upon such real or personal property or trade fixtures of Tenant, and if Landlord pays the taxes based upon such increased assessment, Tenant shall, upon demand, repay to Landlord the taxes so levied or the portion of such taxes reusing from such increase in the assessment.

6.03 Rental Taxes

In addition to the Rent which Tenant is required to pay Landlord herein, Tenant shall pay Landlord all transaction privilege, sales, rental and/or other taxes or licenses (but excluding income or estate taxes charged against Landlord) levied upon or assessed against Landlord by any governmental authority having jurisdiction, which are measured by the Rent or other charges in any form paid by Tenant to Landlord hereunder. The amount required to be paid by Tenant to Landlord pursuant to the immediately preceding sentence shall be paid at the time the applicable Rent is due or other charges are due and shall be considered as payment of taxes or licenses, as the case may be, and not for the payment of Rent.

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ARTICLE 7: INSURANCE

7.01 Tenant's Insurance

Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and any other period of occupancy of the Premises by Tenant, the following types of insurance with insurance companies approved to engage in business in the State of Arizona, and reasonably approved by Landlord, in the amounts specified and in the form hereinafter provided for:

(a) Fire, casualty and extended coverage insurance on Tenant's fixtures, improvements and other property for not less than the full replacement value, together with business interruption coverage, as Landlord may reasonably require. Such policy shall contain an agreed amount endorsement in lieu of a coinsurance clause.

(b) Commercial liability insurance insuring Tenant against any liability arising out of the lease, use, occupancy or maintenance of the Premises and all areas appurtenant thereto or business operated by Tenant pursuant to the Lease, including that from personal injury or property damage in or about the Premises, insuring Landlord, and any designated mortgagee of Landlord, and Tenant, and naming Landlord and any designated mortgagee of Landlord as an additional insured therein. Such insurance shall be in the minimum amounts of not less than $3,000,000 per occurrence against liability for bodily injury including death and personal injury for any single (1) occurrence and not less than $1,000,000 per occurrence for property damage, or combined single limit insurance insuring for bodily injury, death and property damage in an amount of not less than $5,000,000. The policy shall insure the hazards of the Premises and Tenant's operations therein, shall include independent contractor and contractual liability coverage (covering the indemnity contained in Section 7.06 hereof) and shall (a) name Landlord, Landlord's managing agent and the Landlord's mortgagee under a mortgage or beneficiary under a deed of trust either having a first lien against the Building or Project (the "Lender") as an additional insured; (b) contain a cross-liability provision; and (c) contain a provision that the insurance provided hereunder shall be primary and non-contributing with any other insurance available to Landlord.

(c) Workers' compensation insurance for the benefit of all employees entering upon the Premises as a result of or in connection with the employment by Tenant;

(d) Such other forms of insurance as may be reasonably required to cover future risks against which a reasonably prudent Landlord or Tenant would protect itself.

Landlord may from time to time amend this Lease Agreement to require increased insurance coverage by the Tenant if in the Landlord's reasonable discretion, the same is necessary to adequately insure Tenant's activities in the Premises or as any Mortgagee may reasonably require. 

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7.02 Form of Insurance Certificates

All policies shall be written in a form satisfactory to Landlord and shall be written by insurance companies licensed with a Best’s rating and Financial Size Category Rating of "A++" and authorized to do business in the state in which the Building is situated. Tenant shall furnish to Landlord, prior to Tenant's entry into the Premises and thereafter within thirty (30) days prior to the expiration of each such policy (or renewal thereof), a certificate of insurance issued by the insurance carrier of each policy of insurance carried by Tenant pursuant hereto, together with a copy of the policy declaration page(s), certifying that such policy(ies) has been issued, provides coverage required by this Article 7 (including name of additional insured entities as required by this Article 7 and a statement that no deductible or self-insurance retention applies to such policy and upon request by Landlord, a copy of each such policy of insurance.

7.03 Tenant's Failure

If Tenant fails to maintain any insurance required in the Lease, Tenant shall be liable for any loss or cost resulting from said failure, and Landlord shall have the right to obtain such insurance on Tenant's behalf and at Tenant's sole expense, the cost of which, plus a fifteen percent (15%) administrative fee, shall be deemed Additional Rent and shall be payable upon Landlord’s demand. This Section 7.03 shall not be deemed to be a waiver of any of Landlord's rights and remedies under any other Section of this Lease. If Landlord obtains any insurance, which is the responsibility of Tenant to obtain under this Article 7, Landlord agrees to deliver to Tenant a written statement setting forth the cost of any such insurance and any administrative fee charged as provided for under this Section of this Lease.

7.04 Waiver of Subrogation

Each policy evidencing insurance required to be carried by Tenant pursuant to this Article 7 shall contain the following clauses and provisions: (i) that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord and that any coverage carried by Landlord be excess insurance; (ii) including Landlord and the parties set forth in Article 7 of this Lease and any other parties designated by Landlord from time to time as additional insured entities; (iii) a waiver by the insurer of any right to subrogation against Landlord and other additional insured entities, its or their agents, employees and representatives which arises or might arise by reason of any payment under such policy(ies) or by reason of any act or omission of Landlord, its agents, employees or representatives; (iv) a severability of interest clause or endorsement; and (v) that the insurer will not cancel or change the coverage provided by such policy without giving Landlord thirty (30) days' prior written notice. Any policy of insurance required to be carried by Tenant that names the parties set forth in this Article 7 as additional insured entities shall not be subject to a deductible or self-insured retention, it being the intent of the parties that such insurance shall fully and completely insure such additional insured entitles for all loss or expense.

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7.05 Tenant's Properties and Fixtures

Tenant assumes the risk of damage to any furniture, equipment, machinery, goods, supplies or fixtures which are or remain the property of Tenant or as to which Tenant retains the right of removal from the Premises, except to the extent due to the negligent act or omission, or willful misconduct of Landlord. Tenant shall not do or keep anything in or about the Premises, which will in any way tend to increase insurance rates paid by Landlord and maintained with respect to the Premises and/or the Project unless Tenant pays directly to Landlord the increase cost of the premiums. In no event shall Tenant carry on any activities, which would invalidate any insurance coverage maintained by Landlord. If Tenant's occupancy or business in, or on, the Premises, whether or not Landlord has consented to the same, results in any increase in premiums for the insurance carried by Landlord with respect to the Building and/or the Project, Tenant shall pay any such increase in premiums as Additional Rent within ten (10) days after being billed therefore by Landlord. In determining whether increased premiums are a result of Tenant’s use of the Building, a schedule issued by the organization computing the insurance rate on the Building and/or the Project showing the various components of such rate shall be conclusive evidence of the several items and charges which make up such rate. Tenant shall promptly comply with all reasonable requirements of the insurance underwriters and/or any governmental authority having jurisdiction there over, necessary for the maintenance of reasonable fire and extended insurance for the Building and/or the Project.

7.06 Indemnification

(a) Tenant, as a material part of the consideration to be rendered to Landlord, hereby indemnifies and agrees to defend and hold Landlord, Landlord's managing agent and Lender, the Premises and the Project harmless for, from and against (i) any and all liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals arising from any injury to any person or persons or any damage to any property resulting from Tenant's or Tenants' officers, employees, agents, assignees, subtenants, concessionaires, licensees, contractors or invitees' use, maintenance, occupation, operation, control of, or entry upon the Premises or into the Building during the Term, or resulting from any breach or default in the performance of any obligation to be performed by Tenant hereunder or for which Tenant is responsible under the terms of this Lease or pursuant to any governmental or insurance requirement, or to the extent arising from any act, neglect, fault or omission of Tenant or any of Tenant's officers, employees, agents, servants, subtenants, concessionaires, licensees, contractors or invitees, and (ii) from and against all costs and charges, including reasonable attorneys' and other reasonable professional fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging the Project, the Property, the Building and/or Premises, or any part or any thereof, from any and all liens, charges or judgments which may accrue or be placed thereon by reason of any act or omission of the Tenant.

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(b) In the event of the concurrent negligence of Tenant, its sublessees, assignees, invitees, agents, employees, contractors, or licensees on the one hand, and the negligence of Landlord, its agents, employees or contractors on the other hand, which concurrent negligence results in injury or damage to persons or property of any nature and howsoever caused, and relates to the construction, alteration, repair, addition to, subtraction from, improvement to or maintenance of the Project, Building, Common Areas or Premises such that Section 4.24.115 Revised Code of Arizona (“RCI”) is applicable, then Tenant's obligation to indemnify Landlord shall be limited to the extent of Tenant's negligence and that of Tenant’s officers, sublessees, assignees, invitees, agents, employees, contractors or licensees, including Tenant's proportional share of costs, reasonable attorneys' fees and expenses incurred in connection with any claim, action or proceeding brought with respect to such injury or damage. If Tenant elects to assert its industrial insurance immunity under title 51 of the RCI, and such assertion is inconsistent with the right of the Landlord to indemnification pursuant to this Lease, Landlord shall retain its right to indemnity hereunder and, correspondingly, Tenant shall remain liable to Landlord as indemnitor. This Section of this Lease has been mutually negotiated by Landlord and Tenant and relates only to Tenant’s waiver of immunity with under industrial insurance, Title 51 RCI, and not to any third party, including any injured employee of Tenant.

(c) In no event shall Landlord, its agents, employees and/or contractors are liable for any personal injury or death or property damage caused by other lessees or their agents, as the case may be, or caused by public or quasi-public work, or for consequential damages arising out of any loss of the use of the Premises or any equipment or facilities therein by Tenant or any person claiming through or under Tenant except if such tenant and/or employee, agent and/or contractor was directed or instructed by landlord, its agents, employees and/or contactors, to act in a manner that results in damages to Tenant.

7.07 Damage to Tenant's Property

Notwithstanding the provisions of Section 7.06 to the contrary, except to the extent due to the gross negligence or willful misconduct of Landlord, Landlord, its agents, employees and/or contractors shall not be liable for (i) any damage to property entrusted to employees or security officers of the Project, Building or the Property, (ii) loss or damage to any property by theft or otherwise, or (iii) any injury or damage to persons or property resulting from fire, explosion, falling substances or materials, steam, gas, electricity, water or rain which may leak from any part of the Building, the Common Areas, Project or the Property or from the pipes, appliances or plumbing work therein or from the roof, street, or subsurface or from any other place or resulting from dampness or any other cause, except to the extent Landlord receives consideration for such damage or injury from a third party. Neither Landlord nor its agents, employees or contractors shall be liable for interference with light. Tenant shall give prompt notice to Landlord and appropriate emergency response officials if Tenant is or becomes aware of fire or accidents in the Building, the Common Areas or any other portion of the Project or of defects therein in the fixtures or equipment.

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ARTICLE 8: REPAIRS AND MAINTENANCE

8.01 Landlord Repairs and Maintenance

Subject to Landlord's right to reimbursement from Tenant pursuant to Sections 6 and Section 8, to the extent applicable, Landlord shall at its expense maintain in good condition and repair the structural portions of the Building including without limitation the foundation, roof and membrane and shall maintain in good condition the exterior of the Building, utilities to their point of connection to the Premises and the Common Areas of the Project. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist and no action is taken to repair failure for ten (10) days after written notice of the need for such repairs or maintenance is given to Landlord by Tenant or a shorter reasonable time if such repair is of an urgent nature. There shall be no abatement of Rent and, except for the negligence or willful misconduct of Landlord or its employees, no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvement in or to any portion of the Premises or in or to fixtures, appurtenances and equipment therein; provided, that Landlord, its employees, agents and contractors use reasonable efforts not to unreasonably interfere with Tenant's business in exercise of Landlord's rights or obligations hereunder. Except as may otherwise be expressly set forth herein, Tenant affirms that (a) neither Landlord nor any agent, employee or officer of Landlord has made any representation regarding the condition of the Premises, the Building, the Common Areas or the Project, and (b) Landlord shall not be obligated to undertake any repair, alteration, remodel, improvement, painting or decorating.

8.02 Utilities and Services

Subject to reimbursement pursuant to Sections 8.03 hereof, to the extent applicable, Landlord shall furnish or cause to be furnished to the Premises lines for water, electricity, sewage and telephone. Tenant shall pay before delinquency, at its sole cost and expense, all charges for water, heat, electricity, power, telephone service, sewer service charges and other utilities or services charged or attributable to the Premises; provided, however, that if any such services or utilities shall be billed to Landlord and are not separately billed to the Premises, Tenant shall pay to Landlord as Additional Rent, an amount equal to that proportion of the total charges therefor which the Rentable Area of the Premises bears to the rentable area of leased area covered by such charges.

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8.03 Tenant Repairs and Maintenance

Except as otherwise set forth in Sections 8.01 and Section 8.02 above, Tenant shall, at Tenant's sole cost and expense, keep, maintain and, to the extent reasonably required, replace the entire Premises, including but not by way of limitation, all interior walls, doors, ceiling, fixtures, furnishings, drapes, specialty lamps, light bulbs used for lighting, starters and ballasts for lighting, subfloors, carpets and floor coverings, elevators and heating, ventilation, air conditioning, and other utility and mechanical systems except dehumidifiers within the Premises to the extent serving the Premises exclusively, in good repair and in a clean and safe condition; provided that Landlord shall have the right to perform such work on behalf of Tenant in which event Tenant shall reimburse Landlord for the cost thereof promptly upon demand therefor. Tenant shall have the right to make routine repairs that are reasonably necessary for the day-to-day operation of the project without requiring prior approval from Landlord. In addition, if any repair or maintenance is necessary or prudent under Sections 8.01 and Section 8.02 as a result of an act or omission of Tenant or its agents, employees or contractors, Tenant shall reimburse Landlord for the entire cost of any such repair or maintenance immediately upon written demand therefor. Upon expiration or earlier termination of the Term, Tenant shall surrender the Premises to Landlord in the same condition as when leased, reasonable wear and tear and damage by fire or other casualty not required to be repaired by Tenant pursuant to this Lease excepted. Notwithstanding the preceding, Landlord may elect to contract with an HVAC service provider for periodic filter changes and inspections of the HVAC equipment located in the Premises ("Periodic Inspections"). The cost of such Periodic Inspections are to be paid by Landlord. HVAC related costs necessary to maintain the HVAC system in top operating condition (repairs, replacements, coil cleaning, etc.) shall be the responsibility of Tenant. All costs due by Tenant to Landlord in this article shall be considered Additional Rent due within ten (10) days after receipt of billing.

8.04 Non-liability of Landlord

Notwithstanding anything to the contrary contained in Sections 8.01 and Section 8.02 above or elsewhere in this Lease, Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, nor shall the Rent herein reserved be abated or rebated by reason of (a) the interruption or curtailment of the use of the Premises as a result of the installation of any equipment in connection with the Building or Project; or (b) any failure to furnish or delay in furnishing any services required to be provided by Landlord, unless and to the extent such failure or delay is caused by accident or any condition created by Landlord's active negligence; or (c) the limitation, curtailment, rationing or restriction of the use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or Project.

8.05 Inspection of Premises

Landlord may enter the Premises to complete construction undertaken by Landlord on the Premises, to inspect, clean, improve or repair the same, to inspect the performance by Tenant of the terms and conditions hereof, show the Premises to prospective purchasers, tenants and lenders and for all other purposes as Landlord shall reasonably deem necessary or appropriate; provided, that Landlord shall use reasonable efforts not to interfere with Tenant's business in exercise of Landlord's rights hereunder. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises and any other loss in, upon or about the Premises, arising from exercise by Landlord of its rights hereunder. 

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ARTICLE 9: FIXTURES, PERSONAL PROPERTY ALTERATIONS

9.01 Fixtures and Personal Property

Tenant, at Tenant's expense, may install any necessary trade fixtures, equipment and furniture in the Premises, provided that such items are installed and are removable without damage to the structure of the Premises, including, but not limited to, damage to drywall, doors, door frames and floors. Landlord reserves the right to approve or disapprove of any interior improvements, which are visible from outside the Premises. Such improvements must be submitted for Landlord's written approval prior to installation, or Landlord may remove or replace such items at Tenant's sole expense. Said trade fixtures, equipment, furniture, cabling and personal property shall remain Tenant's property and shall be maintained in good condition while on the Premises and removed by Tenant upon the expiration or earlier termination of the Lease. As a covenant which shall survive the expiration or earlier termination of the Lease by 30 days, Tenant shall repair, at Tenant's sole expense, or at Landlord's election, reimburse Landlord for the cost to repair all damage caused by the installation or removal of said trade fixtures, equipment, cabling, furniture, personal property or temporary improvements. All installations and fixtures shale become the property of Landlord after completion of installation by Tenant. If Tenant fails to remove any items required by Landlord prior to or upon the expiration or earlier termination of this Lease, Landlord, at its option and without liability to Tenant for loss thereof, may keep and use them or remove any or all of them and cause them to be stored or sold in accordance with applicable law, and Tenant shall, upon demand of Landlord, pay to Landlord as Additional Rent hereunder all costs and expenses incurred by Landlord in so storing and/or selling said items. In the event any such fixtures, equipment, and/or furniture of Tenant are sold by Landlord, the proceeds of such sale shall be applied, first, to all expenses of Landlord incurred in connection with storage and sale; second, to any amounts owed by Tenant to Landlord under this Lease or otherwise, and, third, the remainder, if any, shall be paid to Tenant.

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9.02 Alterations

Tenant shall not make or allow to be made any material alterations, additions or improvements to the Premises (defined as alterations, additions or improvements costing in excess of $5,000.00 individually or in the aggregate with respect to separate items relating to the same improvement or alteration, or alterations, additions or improvements which affect the structure or exterior of the Building or any building, mechanical, electrical or life safety system), either at the inception of the Lease or subsequently during the Term, without obtaining the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion with respect to any alteration, addition or improvement that (i) affects the structure or exterior of the Building or any building, mechanical, electrical or life safety systems or (ii) potentially causes the Premises or Building to fail to comply with Arizona State Marijuana rules and regulations pertaining to facilities producing or processing cannabis, but shall not be unreasonably withheld. Tenant shall deliver to Landlord the contractor's name, state license number, a certificate of liability insurance naming Landlord and Landlord's manager and lender(s) as an additional insured, as well as full and complete plans and specifications of all such alterations, additions or improvements, and any subsequent modifications or additions to such plans and specifications, and no proposed work shall be commenced or continued by Tenant until Landlord has received and given its written approval of each of the foregoing. Landlord shall either approve or disapprove any proposed alteration, addition or improvement within thirty (30) days following receipt of all of the foregoing items, and if Landlord fails to deliver notice of disapproval within 30 days following receipt of all the foregoing items, Landlord's consent is deemed granted. Landlord shall not expressly or implicitly covenant or warrant that any plans or specifications submitted by Tenant are accurate, safe or sufficient or that the same comply with any applicable laws, ordinances, building codes, or the like. Further, Tenant shall indemnify, protect, defend and hold Landlord and Landlord's agents, employees and contractors and the Building harmless for, from and against any loss, damage, liability, claims, cost or expense, including attorneys' fees and costs, incurred as a result of any defects in design, materials or workmanship resulting from Tenant's alterations, additions or improvements to the Premises. All alterations, telephone or telecommunications lines, cables, conduits and equipment and all other additions or improvements to the Premises made by Tenant shall remain the property of Tenant until termination of the Lease, at which time they shall, unless otherwise elected by Landlord by written notice to Tenant, be and become the property of Landlord. Landlord may, as a condition to approval of any such alterations, additions or improvements, require Tenant to remove any partitions, counters, railings, telephone and telecommunications lines, cables, conduits and equipment and/or other improvements installed by Tenant during the Term, and Tenant shall repair all damage resulting from such removal or shall pay to Landlord all costs arising from such removal if Landlord shall demand the removal of such alterations, additions and improvements prior to lease expiration or earlier termination of the Lease and Tenant fails to remove and repair the Premises prior to Tenant’s vacation thereof. All repairs, alterations, additions and restorations by Tenant hereinafter required or permitted shall be done in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord and in compliance with all applicable laws and ordinances, building codes, bylaws, regulations and orders of any federal, state, county, municipal or other public authority and of the insurers of the Premises and as-built plans and specifications shall be provided to Landlord by Tenant upon completion of the work. If required by Landlord, Tenant shall secure at Tenant's own cost and expense a completion and lien indemnity bond or other adequate security, in form and substance reasonably satisfactory to Landlord. Tenant shall reimburse Landlord for Landlord's reasonable charges (including any professional fees incurred by Landlord and a reasonable administrative fee as established by Landlord from time to time) for reviewing and approving or disapproving plans and specifications for any proposed alterations.

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9.03 Liens

Tenant shall promptly file and/or record, as applicable, all notices of completion provided for by law, and shall pay and discharge all claims for work or labor done, supplies furnished or services rendered at the request of Tenant or at the request of Landlord on behalf of Tenant, and shall keep the Premises, the Property and the Project free and clear of all contractor’s, mechanics', materialmen's and worker’s liens in connection therewith. Landlord shall have the right, and shall be given ten (10) business days written notice by Tenant prior to commencement of the work, to post or keep posted on the Premises, or in the immediate vicinity thereof, any notices of non-responsibility for any construction, alteration, or repair of the Premises by Tenant. If any such lien or notice preceding the filing of any lien is filed, Tenant shall cause same to be discharged of record within ten (10) days thereof, or if Tenant disputes the correctness or validity of any claim of lien, Landlord may, in its reasonable discretion, permit Tenant to post or provide security in a form and amount acceptable to Landlord to insure that title to the Building and the Project remains free from any such actual or potential encumbrance. If said lien or potential encumbrance is not timely discharged by Tenant as aforesaid, Landlord may, but shall not be required to, take such action or pay such amount as may be necessary to remove such lien and Tenant shall pay to Landlord as Additional Rent any such amounts expended by Landlord, together with interest thereon at the Default Rate of 12% within five (5) days after notice is received from Landlord of the amount expended by Landlord. 

ARTICLE 10: USE AND CONFLUENCE WITH APPLICABLE LAW

10.01 Premises Use and Confluence with Applicable Law

State and Federal Law Confluence. Tenant shall only use the Premises for the purposes described in Section 1.01 above, and uses customarily incidental thereto, and for no other use without the prior written consent of Landlord. Tenant shall, at Tenant's sole cost and expense, comply with applicable requirements of municipal, county, state and, except as to certain applicable federal law, other applicable governmental authorities now or hereafter in force pertaining to Tenant's business operations, alterations and/or specific use of the Premises, the Building and/or the Project, and shall secure any necessary permits therefore and shall faithfully observe in the use of the Premises, Building and the Project, applicable municipal, county, state and, except as to certain applicable federal law, other applicable governmental entities' requirements which are now or which may hereafter be in force. In connection with the immediately preceding sentence, Tenant and Landlord acknowledge their belief that the Lease of the Premises for the intended use relates to activities that they have been advised are lawful under the laws of the State of Arizona, yet perhaps not lawful under the laws of the United States. The parties acknowledge that both are benefited by the exchanged considerations under this Lease and owing to their mutual understanding that the intended Premises use is lawful under the laws of the State of Arizona, hereby agree that present status of federal law rendering the intended use of the Premises as unlawful shall not serve as a basis for Tenant to claim a breach of the terms hereof for any reason.

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10.02 Hazardous Materials

(a) Defined terms. "Hazardous Materials" means, among other things, any of the following, in any amount: (a) any petroleum or petroleum derived or derivative product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls and medical wastes; (b) any radioactive substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals, materials or substances, whether solid, liquid or gas, defined as or included in the definitions of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," ''toxic substances," "toxic pollutants," "solid waste," or words of similar import in any federal, state or local statute, law, ordinance or regulation or court decisions now existing or hereafter existing as the same may be interpreted by government offices and agencies. "Hazardous Materials Laws" means any federal, state or local statutes, laws, ordinances or regulations or court decisions now existing or hereafter existing that control, classify, regulate, list or define Hazardous Materials or require remediation of Hazardous Materials contamination.

(b) Compliance with Hazardous Materials Laws. Tenant will not cause any Hazardous Material to be brought upon, kept, generated or used on the Project in a manner or for a purpose prohibited by or that could result in liability under any Hazardous Materials Law; provided, however, in no event shall Tenant allow any Hazardous Material to be brought upon, kept, generated or used in the Premises or on the Project other than those Hazardous Materials for which Tenant has received Landlord's prior written consent to bring on (other than small quantities of cleaning or other/industrial supplies as are customarily used by a Tenant in the ordinary course of business in a general industrial business park facility). Tenant, at its sole cost and expense, will comply with (and obtain all permits required under) all Hazardous Materials Laws, groundwater wellhead protection laws, storm water management laws, fire protection provisions, and prudent industry practice relating to the presence, storage, transportation, disposal, release or management of Hazardous Materials in, on, under or about the Premises or the Project that Tenant brings upon, keeps, generates or uses in the Premises or on the Project (including, without limitation, but subject to this Section 10.02, immediate remediation of any Hazardous Materials in, on, under or about the Project that Tenant brings upon, keeps, generates or uses on the Project in compliance with Hazardous Materials Laws) and in no event shall Tenant allow any liens or encumbrances pertaining to Tenant's use of Hazardous Materials to attach to any portion of the Project. On or before the expiration or earlier termination of this Lease, Tenant, at its sole cost and expense, will completely remove from the Premises or, as applicable, the Project (regardless whether any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials Laws, all Hazardous Materials Tenant causes to be present in, on, under or about the Premises or the Project. Tenant will not take any remedial action in response to the presence of any Hazardous Materials in on, under or about the Premises or the Project, nor enter into (or commence negotiations with respect to) any settlement agreement, consent decree or other compromise with respect to any claims relating to or in any way connected with Hazardous Materials in, on, under or about the Premises or the Project, without first notifying Landlord of Tenant's intention to do so and affording Landlord reasonable opportunity to investigate, appear, intervene and otherwise assert and protect Landlord's interest in the Premises and/or the Project. Landlord shall have the right from time to time to inspect the Premises to determine if Tenant is in compliance with this Section 10.02.

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(c) Notice of Actions. Tenant will notify Landlord of any of the following actions affecting Landlord, Tenant or the Premises or the Project that result from or in any way relate to Tenant's use of the Premises or the Project immediately after receiving notice of the same: (i) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened under any Hazardous Materials Law; (ii) any claim made or threatened by any person relating to damage, contribution, liability, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Material; and (iii) any reports made by any person, including Tenant, to any environmental agency relating to any Hazardous Material, including any complaints, notices, warnings or asserted violations. Tenant will also deliver to Landlord, as promptly as possible and in any event within five (5) business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises or the Project or Tenant's use of the Premises or the Project. Upon Landlord's written request, Tenant will promptly deliver to Landlord documentation acceptable to Landlord reflecting the legal and proper disposal of all Hazardous Materials removed or to be removed from the Premises. All such documentation will list Tenant or its agent as a responsible party and the generator of such Hazardous Materials and will not attribute responsibility for any such Hazardous Materials to Landlord or Landlord's property manager.

(d) Disclosure and Warning Obligations. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous Materials Laws resulting from or in any way relating to Tenant's use of the Premises or Project are Tenant's sole responsibility, regardless whether the Hazardous Materials Laws permit or require Landlord to report or warn.

(e) Indemnification. Tenant releases and will indemnify, defend (with counsel reasonably acceptable to Landlord), protect and hold harmless the Landlord and Landlord's agents, employees and contractors for, from and against any and all claims, liabilities, damages, losses, costs and expenses whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under, upon or from the Premises or the Project (including water tables and atmosphere) that Tenant brings upon, keeps, generates or uses on the Premises or the Project. Tenant's obligations under this Section include, without limitation and whether foreseeable or unforeseeable, (i) the costs of any required or necessary repair, cleanup, detoxification or decontamination of the Premises or the Project; (ii) the costs of implementing any closure, remediation or other required action in connection therewith as stated above; (iii) the value of any loss of use and any diminution in value of the Premises or the Project, and (iv) consultants' fees, experts' fees and response costs. The Tenant's obligations under this section survive the expiration or earlier termination of this Lease.

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(f) Hazardous Materials Representation by Landlord. Landlord represents to Tenant that, to its actual knowledge and except as Landlord has previously disclosed to Tenant, Landlord has not caused the generation, storage or release of Hazardous Materials upon the Premises, except in accordance with Hazardous Materials Laws and prudent industry practices regarding construction of the Premises.

(g) Environmental Site Assessments. Upon request by Landlord during the Term of this Lease, prior to the exercise of any renewal Term and/or prior to vacating the Premises, Tenant will obtain and submit to Landlord an environmental site assessment from an environmental consulting company reasonably acceptable to Landlord.

10.03 Signs

The Tenant shall not paint, display, inscribe, place or affix any sign, picture, advertisement, notice, lettering, or direction on any part of the outside of the Building or the Project or visible from the outside of the Premises, the Building or the Project, except as first approved by Landlord in writing or as may be set forth in the Outline Plans and Specifications. All signage shall comply with the Project sign criteria as adopted and promulgated by Landlord from time to time.

ARTICLE 11: DAMAGE AND DESTRUCTION

11.01 Reconstruction

If the Building is damaged or destroyed during the Term other than by reason of the negligence or act of Tenant, Landlord shall, except as hereinafter provided, diligently repair or rebuild it to substantially the condition in which it existed immediately prior to such damage or destruction. If Landlord is obligated or elects to repair or restore as herein provided, Landlord shall be obligated to make repair or restoration of only those portions of the Premises which were initially provided at Landlord's expense or as part of the original installation by Landlord for Tenant and the repair and/or restoration of other items within the Premises shall be the obligation of the Tenant.

11.02 Excessive Damage or Destruction

If the Building or the Premises is damaged or destroyed by reason arising other than through the neglect or act of Tenant to the extent that it cannot within Landlord's reasonable discretion, with reasonable diligence, be fully repaired or restored by Landlord within the earlier of (i) one hundred twenty (120) days after the date of the damage or destruction, or (ii) the expiration of the Term hereof, Landlord may terminate this Lease by written notice to Tenant within thirty (30) days of the date of the damage or destruction. If Landlord does not terminate the Lease, this Lease shall remain in full force and effect and Landlord shall diligently repair and restore the damage as soon as reasonably possible.

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11.03 Uninsured Casualty

Notwithstanding anything contained herein to the contrary, in the event of damage to or destruction of all or any portion of the Building, which damage or destruction is not fully covered by the insurance proceeds received by Landlord under the insurance policies described in Article 7 hereinabove, Landlord may terminate this Lease by written notice to Tenant given within sixty (60) days after the date of notice to the Landlord that said damage or destruction is not so covered. If Landlord does not elect to terminate this Lease, the Lease shall remain in full force and effect and the Building shall be repaired and rebuilt in accordance with the provisions for repair set forth in Section 11.01 hereinabove.

11.04 Waiver

With respect to any damage or destruction which Landlord is obligated to repair or may elect to repair under the terms of this Article 11, and to the extent permitted by law, Tenant hereby waives any rights to terminate this Lease pursuant to rights otherwise accorded by law to tenants, except as expressly otherwise provided herein.

11.05 Mortgagee's Right

Notwithstanding anything herein to the contrary, if the holder of any indebtedness secured by a mortgage or deed of trust covering the Property, the Building and/or the Project requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirement is made. Upon any termination of this Lease under the provisions hereof, the parties shall be released without further obligation to the other from date possession of the Premises is surrendered to Landlord, except for items which are theretofore accrued and are then unpaid.

11.06 Damage Near End of Term

Notwithstanding anything to the contrary contained in this Article 11, in the event the Premises or the Building are subject to excessive damage (as defined in Section 11.03 during the last twenty-four (24) months of the Term or any applicable extension periods, Landlord may elect to terminate this Lease by written notice to Tenant within thirty (30) days after the date of such damage. 

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ARTICLE 12: EMINENT DOMAIN

12.01 Condemnation & Eminent Domain

In the event the whole of the Premises, Building, Project and/or Common Areas, as the case may be, and/or such part thereof as shall substantially interfere with Tenant's use and occupation thereof, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or is sold in lieu of or to prevent such taking, then Tenant shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority. In the event the whole of the Premises, Building, Project and/or Common Areas, as the case may be, or such part thereof as shall substantially interfere with Landlord's use and occupation thereof, or if any access points to adjoining streets, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or is sold in lieu of or to prevent such taking, then Landlord shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority. Except as provided below, Tenant shall not assert any claim against Landlord or the taking authority for any compensation because of such taking, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant in the Premises. Nothing contained in this Article 12 shall be deemed to give Landlord any interest in any separate award made to Tenant for the taking of personal property and fixtures belonging to Tenant or for Tenant's moving expenses. In the event the amount of property or the type of estate taken shall not substantially interfere with the conduct of Tenant's business, Landlord shall be entitled to the entire amount of the award without deduction for any estate or interest of Tenant, Landlord shall promptly proceed to restore the Building to substantially their same condition prior to such partial taking less the portion thereof lost in such condemnation, and the Base Rent shall be proportionately reduced by the time during which, and the portion of the Premises which, Tenant shall have been deprived of possession on account of said taking and restoration. 

ARTICLE 13: DEFAULT

13.01 Events of Default

The occurrence of any of the following events shall constitute an "Event of Default" on the part of the Tenant with or without notice from Landlord:

(a) Tenant shall fail to pay on or before the due date any installment of Rent or other payment required pursuant to this Lease;

(b) Tenant shall abandon the Premises, whether or not Tenant is in default of the Rent payments due under this Lease;

(c) Tenant shall fail to comply with any Term, provision, or covenant of this Lease, and such failure is not cured within ten (10) days after written notice thereof to Tenant (said notice being in lieu of, and not in addition to, any notice required as a prerequisite to a forcible entry and detainer or similar action for possession of the Premises); provided that if the nature of such cure is such that a longer cure period is necessary, Tenant shall only be in default if Tenant shall have failed to commence such cure within said ten (10) day period and thereafter to have diligently prosecuted such cure to completion;

(d) Tenant shall file a petition or be adjudged a debtor or bankrupt or insolvent under the United States Bankruptcy Code, as amended, or any similar law or statute of the United States or any State; or a receiver or trustee shall be appointed for all or substantially all of the assets of Tenant and such appointment or petition, if involuntary, is not dismissed within sixty (60) days of filing; or

(e) Tenant shall make an assignment for the benefit of creditors.

(f) Tenant does not fully comply with the terms listed in the “LICENSED MARIJUANA COMPLIANCE AGREEMENT,” which will be considered an incurable default.

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13.02 Remedies

(a) Upon the occurrence of any Event of Default set forth in this Lease, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder, in the event that Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant: (i) any unpaid Rent which has been earned at the time of such termination plus interest at the rates contemplated by this Lease; plus (ii) 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 Tenant proves could have been reasonably avoided plus interest at the rates contemplated by this Lease; plus (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 Tenant proves could be reasonably avoided; plus (iv) the unamortized balance of the value of any free rent, tenant improvement costs, commissions and any other monetary concessions provided to Tenant pursuant to this Lease, as amortized over the initial Term of this Lease; plus (v) any other amount necessary to compensate Landlord for all the damage proximately caused by Tenant's failure to perform Tenant's obligation under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, costs to restore the Premises to good condition, costs to remodel, renovate or otherwise prepare the Premises, or portions thereof, for a new tenant, leasing commissions, marketing expenses, reasonable attorneys' fees, and free rent, moving allowances and other types of leasing concessions. As used in Subsections 13.02(a) (iii) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(b) In the event of any such default by Tenant, Landlord shall also have the right with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises if the tenant fails to comply within the ten day period described above; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of the Tenant No re-entry or taking possession of the Premises by Landlord pursuant to this Section 13.02(b) shall be construed as an acceptance of a surrender of the Premises or an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.

(c) In the event of the vacation or abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter as provided above or shall take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease as provided above, Landlord may from time to time, without terminating this Lease, either recover all Rent as it becomes due or re-let the Premises or any part thereof for the Term of this Lease on terms and conditions as Landlord at its sole discretion may deem advisable with the right to make alterations and repairs to the Premises.

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(d) In the event that Landlord shall elect to so re-let, the rents received by Landlord from such relating shall be applied: first to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord second to the payment of any costs of such re-letting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of Rent due and unpaid hereunder; and the residual, if any, shall be held by Landlord and applied to payment of future Rent as the same shall become due and payable hereunder. Should that portion of such rents received from such re-letting during the month, which is applied to the payment of Rent, be less than the Rent payable during that month by Tenant hereunder, then Tenant shall pay any such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as is certain, any of the costs and expenses incurred by Landlord in such re-letting or in making such alterations and repairs not covered by the rents received from such re-letting.

(e) All rights, options and remedies of Landlord contained in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. No waiver of any default of Tenant hereunder shall be implied from any acceptance by Landlord of any Rent or other payments due hereunder or any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver. The consent or approval of Landlord to or of any act by Tenant requiring Landlord's consent or approval shall not be deemed to waive or render unnecessary Landlord's consent or approval to or of any subsequent similar acts by Tenant.

(f) In the event that during any twelve month period of this Lease, Tenant commits more than two (2) acts or omissions of default for which default notices are given by Landlord pursuant to this Article 13 (whether or not such defaults are cured by Tenant), Landlord may, at its option, elect to terminate this Lease. Landlord's election to exercise its early termination rights shall be effective only upon written notice delivered to Tenant specifying Landlord's election to cause an early termination of this Lease. Such early termination shall be in effect when such written notice is provided to Tenant. Landlord's right of early termination shall be in addition to all other rights and remedies available to Landlord at law or in equity, however, if Landlord makes this election in spite of Tenant having cured every breach within the described period, Landlord shall have no right to collect any additional future rent.

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13.03 Landlord's Default

Landlord shall not be in default unless Landlord fails to perform its obligations under this Lease within thirty (30) days after written notice by Tenant, or if such failure is not reasonably capable of being cured within such thirty (30) day period, Landlord shall not be in default unless Landlord has failed to commence the cure and diligently pursue the cure to completion. In no event shall Landlord be liable to Tenant or any person claiming through or under Tenant for consequential, exemplary or punitive damages. 

ARTICLE 14: FILING OF PETITION

14.01 Tenant's Bankruptcy

Landlord and Tenant (as either debtor or debtor-in-possession) agree that if a petition ("Petition") is filed by or against Tenant under any Chapter of Title 11 of the United States Code (the "Bankruptcy Code"), the following provisions shall apply:

(a) Adequate protection for Tenant's obligations accruing after filing of the Petition and before this Lease is rejected or assumed shall be provided within 15 days after filing in the form of a security deposit equal to three months' Base Rent and Additional Rent and other Lease charges, to be held by the court or an escrow agent approved by Landlord and the court.

(b) The sum of all amounts payable by Tenant to Landlord under this Lease constitutes reasonable compensation for the occupancy of the Premises by Tenant.

(c) Tenant or Trustee shall give Landlord at least 30 days written notice of any abandonment of the Premises or any proceeding relating to administrative claims. If Tenant abandons without notice, Tenant or Trustee shall stipulate to entry of an order for relief from stay to permit Landlord to reenter and re-let the Premises.

(d) If Tenant failed to timely and fully perform any of its obligations under this Lease before the filing of the Petition, whether or not Landlord has given Tenant written notice of that failure and whether or not any time period for cure expired before the filing of the Petition, Tenant shall be deemed to have been in default on the date the Petition was filed for all purposes under the Bankruptcy Code.

(e) For the purposes of Section 365(b)(1) of the Bankruptcy Code, prompt cure of defaults shall mean cure within 30 days after assumption.

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(f) For the purposes of Section 365(b)(1) and 365(f)(2) of the Bankruptcy Code, adequate assurance of future performance of this Lease by Tenant, Trustee or any proposed assignee will require that Tenant, Trustee or the proposed assignee deposit three months of Base Rent and Additional Rent into an escrow fund (to be held by the court or an escrow agent approved by Landlord and the court) as security for such future performance. In addition, if this Lease is to be assigned, adequate assurance of future performance by the proposed assignee shall require that: (i) the assignee have a tangible net worth not less than the net worth of Tenant as of the Commencement Date or that such assignee's performance be unconditionally guaranteed by a person or entity that has a tangible net worth not less than the net worth of Tenant as of the Commencement Date; (ii) the assignee demonstrate that it possesses a history of success in operating a business of similar size and complexity in a similar market as Tenant's business; and (iii) assignee assume in writing all of Tenant's obligations relating to the Premises or this Lease.

(g) If Tenant or Trustee intends to assume and/or assign this Lease, Tenant or Trustee shall provide Landlord with 30 days written notice of the proposed action, separate from and in addition to any notice provided to all creditors. Notice of a proposed assumption shall state the assurance of prompt cure, compensation for loss and assurance of future performance to be provided to Landlord. Notice of a proposed assignment shall state: (i) the name, address, and federal tax identification and registration numbers of the proposed assignee; (ii) all of the terms and conditions of the proposed assignment, and (iii) the assignee's proposed adequate assurance of future performance to be provided to Landlord.

(h) If Tenant is in default under this Lease when the Petition is filed, Landlord shall not be required to provide Tenant or Trustee with services or supplies under this Lease or otherwise before Tenant assumes this Lease, unless Tenant compensates Landlord for such services and supplies in advance.

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ARTICLE 15: ASSIGNMENT AND SUBLETTING

15.01 Prohibition

Tenant shall not assign, mortgage, pledge or otherwise transfer or encumber this Lease, in whole or in part, nor sublet, assign, or permit occupancy by any party other than Tenant of all or any part of the Premises, without the prior written consent of Landlord, which may not be unreasonably withheld. Tenant shall at the time the Tenant requests the consent of Landlord, deliver to Landlord such information in writing as Landlord may reasonably require respecting the proposed assignee or subtenant including, without limitation, the name, address, nature of business, ownership, financial responsibility and standing of such proposed assignee or subtenant and Landlord shall have not less than twenty (20) business days after receipt of all required information to elect one of the following: (a) consent to such proposed assignment, encumbrance or sublease, or (b) refuse such consent. In addition, as a condition to Landlord's consent to any assignment, sublease or encumbrance of this Lease shall be the delivery to Landlord of a true copy of the fully executed instrument of assignment, transfer or encumbrance and an agreement executed by the assignee, sublessee or other transferee in form and substance satisfactory to Landlord and expressly enforceable by Landlord, whereby the assignee assumes and agrees to be bound by the terms and provisions of this Lease and perform all the obligations of Tenant hereunder with respect to the assigned or subleased portion of the Premises. No assignment or subletting by Tenant shall relieve Tenant or Guarantor of any obligation under this Lease, including Tenant’s obligation to pay Base Rent and Additional Rent hereunder. Any purported assignment or subletting contrary to the provisions hereof without consent shall be void. The consent by Landlord to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment of subletting. Tenant's sole remedy for Landlord's refusal to consent to a proposed assignee or sublessee of Tenant will be an action or proceeding for specific performance, injunction or declaratory relief. Tenant shall pay Landlord's reasonable processing costs and attorneys' fees incurred in reviewing any proposed assignment or sublease.

15.02 Excess Rental

If pursuant to any assignment or sublease, Tenant receives rent, either initially or over the Term of the assignment or sublease, in excess of the Rent called for hereunder, or in the case of this sublease of a portion of the Premises in excess of such Rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are appropriately taken into account, Tenant shall pay to Landlord, as Additional Rent hereunder, fifty percent (50%) of the excess of each such payment of rent received by Tenant after its receipt.

15.03 Scope

The prohibition against assigning or subletting contained in this Article 15 shall be construed to include a prohibition against any assignment or subletting by operation of law. If this Lease be assigned, or if the underlying beneficial interest of Tenant is transferred, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord may collect Rent from the assignee, subtenant or occupant and apply the net amount collected to the Rent herein reserved and apportion any excess Rent so collected in accordance with the terms of the immediately preceding paragraph, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. No assignment or subletting shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee), and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease. 

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15.04 Waiver

Notwithstanding any assignment or sublease, or any indulgences, waivers or extensions of time granted by Landlord to any assignee or sublessee or failure of Landlord to take action against any assignee or sublease, Tenant hereby agrees that Landlord may, at its option, and upon not less than ten (10) days' notice to Tenant, proceed against Tenant without having taken action against or joined such assignee or sublessee, except that Tenant shall have the benefit of any indulgences, waivers and extensions of time granted to any such assignee or sublessee.

15.05 Change in Control

Tenant is a limited liability company, a withdrawal of or change in general partners or members, in one or more transfers, owning more than a fifty one percent (51%) interest and less than a one hundred percent interest (100%) in the LLC to a single party and/or its affiliates, shall constitute a voluntary assignment and shall be subject to the provisions of this Article 15. If the Tenant is a corporation, a transfer of fifty one percent (51%) or more and less than one hundred percent (100%) of the corporation's stock or assets in one or more transfers to a single party and/or its affiliates, or a change in the control of such company pursuant to a merger, consolidation, sale of assets or otherwise of more than fifty one percent and less than one hundred percent to a single party and/or its affiliates, shall be deemed for the purposes hereof to be an assignment of this Lease, and shall be subject to the provisions of this Article 15.

ARTICLE 16: ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION

16.01 Estoppel Certificate

Within ten (10) business days after request therefor by Landlord, or if on any sale, assignment or hypothecation by Landlord of Landlord's interest in the Property, the Project and/or the Premises, or any part thereof, an estoppel certificate shall be required from Tenant, Tenant shall deliver to the requesting party a statement in writing: (a) certifying that the Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying that the Lease, as so modified, is in full force and effect; (b) certifying the dates to which the Rent and other charges are paid in advance, if any; and (c) acknowledging that there are not, to such party's knowledge, any uncured defaults on the part of the requesting party hereunder, or specifying such defaults if they are claimed. Any such statement may be relied upon by any prospective purchaser or lender of all or any portion of the Premises or any leasehold interest therein. The failure to deliver such statement within such time shall, at Landlord’s option be an Event of Default hereunder and shall be conclusive and binding upon the party upon whom the request is made 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 on the requesting party's performance; and (iii) no Rent has been paid in advance. If Tenant is required or requested to execute more than one estoppel certificate or similar document in any twelve (12) month period, Landlord shall reimburse Tenant for its legal fees incurred in having such documents reviewed, up to a total charge of five hundred dollars ($500.00). 

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16.02 Attornment

Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage or deed of trust made by Landlord, its successors or assigns, encumbering the Premises or the Building, or any part thereof or in the event of termination of a ground lease, if any, and if so requested, attorn to the purchaser upon such foreclosure or sale or upon any grant of a deed in lieu of foreclosure and recognize such purchaser as Landlord under this Lease; provided, that such purchaser recognizes Tenant's rights under this Lease and agrees not to disturb Tenant's quiet possession of the Premises for so long as Tenant is not in default hereunder.

16.03 Subordination

The rights of Tenant hereunder are and shall be, at the election of any mortgagee or the beneficiary of a deed of trust encumbering the Project (or the portion thereof on which the Building is located) and/or Building, subject and subordinate to the lien of such mortgage or deed of trust, or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the Project (or the portion thereof on which the Building is located) and/or the Building, and to all advances made or hereafter to be made upon the security thereof. If requested, Tenant agrees to execute such documentation as may be required by Landlord or its lender to further effect the provisions of this Article 16 in such form as reasonably requested by Landlord or its Lender.

16.04 Recording

Tenant covenants and agrees with Landlord that Tenant shall not record this Lease or any memorandum thereof without Landlord's prior written consent. Notwithstanding the provisions of Section 16.04, in the event that Landlord or its lender requires this Lease or a memorandum thereof to be recorded in priority to any mortgage, deed of trust or other encumbrance which may now or at any time hereafter affect in whole or in part the Building, the Project (or the portion thereof on which the Building is located), and whether or not any such mortgage, deed of trust or other encumbrance shall affect only the Building, the Project (or the portion thereof on which the Building is located), or shall be a blanket mortgage, deed of trust or encumbrance affecting other premises as well, the Tenant covenants and agrees with Landlord that the Tenant shall execute promptly upon request from Landlord any certificate, priority agreement or other instrument which may from time to time be requested to give effect thereto.

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ARTICLE 17: MISCELLANEOUS

17.01 Notices

Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Landlord at the address provided in Section 1.01. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Tenant at the address provided in Section 1.01, or to such other address as Tenant or Landlord may designate by written notice to the other. Notices shall be deemed sufficiently served upon the earlier of actual receipt or the expiration of three (3) days after the date of mailing thereof, or if a party can conclusively show that actual receipt occurred by others means such as an email that was replied to with the original email text retained or by other method that conclusively demonstrates actual receipt, then notice shall be deemed properly delivered.

17.02 Successors Bound

This Lease and each of its covenants and conditions shall be binding upon and shall inure to the benefit of the parties hereto and their respective assignees, subject to the provisions hereof. Whenever in this Lease a reference is made to Landlord, such reference shall be deemed to refer to the person in whom the interest of Landlord shall be vested, and Landlord shall have no obligation hereunder as to any claim arising after the transfer of its interest in the Building. Any successor or assignee of the Tenant who accepts an assignment of the benefit of this Lease and enters into possession or enjoyment hereunder shall thereby assume and agree to perform and be bound by the covenants and conditions thereof. Nothing herein contained shall be deemed in any manner to give a right of assignment without the prior written consent of Landlord pursuant to, or otherwise as provided in, Article 15 hereof.

17.03 Waiver

No waiver of any default or breach of any covenant by either party hereunder shall be implied from any omission by either party to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver and said waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term or condition contained herein by either party shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by either party to or of any act by either party requiring further consent or approval shall not be deemed to waive or render unnecessary their consent or approval to or of any subsequent similar acts.

17.04 Subdivision and Easements

Landlord reserves the right to: (a) subdivide the Project; (b) alter the boundaries of the Project; and (c) grant easements on the Project and dedicate for public use portions thereof; provided, however, that no such grant or dedication shall materially interfere with Tenant's use of the Premises. Tenant hereby consents to such subdivision, boundary revision, and/or grant or dedication of easements and agrees from time to time, at Landlord's request, to execute, acknowledge and deliver to Landlord, in accordance with Landlord's instructions, any and all documents, instruments, maps or plats necessary to effectuate Tenant's consent thereto.

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17.05 Landlord's Reserved Rights in Common Areas

Landlord reserves the right from time to time, provided that Tenant's use and enjoyment of the Premises is not materially and adversely affected thereby, to: (a) install, use, maintain, repair and replace pipes, ducts, conduits, wires and appurtenant meters and equipment for service to the Premises or other parts of the Building above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas, and to relocate any pipes, ducts, conduit, wires and appurtenant meters in the Building which are located or located elsewhere outside the Building; (b) make changes to the Common Areas and/or the parking facilities located thereon, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways; (c) close temporarily all or any portion of the Common Areas and/or the Building in order to perform any of the foregoing or any of Landlord's obligations under this Lease, so long as reasonable access to the Building remains available during normal business hours; and (d) alter, relocate or expand, and/or to add additional structures and improvements to, or remove same from, all or any portion of the Common Areas or other portions of the Project.

17.06 Accord and Satisfaction

No payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein stipulated shall be deemed to be other than on account of the Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or pursue any other remedy provided in this Lease unless agreed upon in writing or electronic writing between the parties.

17.07 Limitation of Landlord's and Tenant's personal liabilities

The obligations of Landlord and Tenant under this Lease do not constitute personal obligations of the individual partners, directors, officers, members, employees or shareholders of each respective party or their partners, and each party shall look solely to the named entities on this lease, and the rents and profits therefrom, for satisfaction of any liability in respect to this Lease and will not seek recourse against the individual partners, directors, officers, members, employees or shareholders of either party, or their partners or any of their personal assets for such satisfaction unless otherwise expressly provided or committed to by either party. Nothing herein shall abrogate the rights of any party to pursue any other party for a tort action committed that party him or herself.

17.08 Survival

The obligations and liabilities of each party which are incurred or accrue prior to the expiration of this Lease or the termination of this Lease or of Tenant's right of possession shall survive such expiration or termination, as shall all provisions by which a party is to provide defense and indemnity to the other party, all provisions waiving or limiting the liability of Landlord, and all attorneys' fees provisions.

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17.09 Attorneys' Fees

In the event either party requires the services of an attorney in connection with enforcing the terms of this Lease or in the event suit is brought for the recovery of any Rent due under this Lease or the breach of any covenant or condition of this Lease, or for the restitution of the Premises to Landlord and/or eviction of Tenant during the Term of this Lease, or after the expiration thereof, the substantially prevailing party will be entitled to a reasonable sum for attorneys' fees, witness fees and other court costs, both at trial and on appeal.

17.10 Captions and Article Numbers

The captions, article, paragraph and Section numbers and table of contents appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent or such Sections or articles of this Lease nor in any way affect this Lease.

17.11 Severability

If any Term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Lease, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

17.12 Governing Law, Dispute Resolution and Venue

This Lease shall be construed in accordance with the laws of the State of Arizona. In the event of any dispute, venue shall be the state court located in Arizona.

In the event a party is in breach of this Agreement and the failure of a party to cure said breach in a timely manner, pursuant to this Agreement, to the other party’s satisfaction within the period set forth herein, the other party or parties, in addition to and not in limitation of any other rights and remedies available to such other party or parties at law or in equity, shall have the right to seek injunctive relief and/or the appointment of a receiver. 

The forgoing notwithstanding, the parties hereby agree to attempt to resolve all differences among themselves by non-binding mediation. In the event of a dispute, either party may demand mediation (a settlement conference). If the parties fail to agree upon a mediator within five (5) business days of demand for mediation, either party may petition the Maricopa County Superior Court in Arizona for the appointment of a mediator. If the dispute is not resolved by agreement of all parties within thirty (30) calendar days of the appointment of a mediator, or within forty-five (45) days after the written request for mediation is transmitted to the other party, either party may commence arbitration. The parties shall split the mediator’s fee.

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If mediation is not timely commenced or fails, all disputes among the parties to this Agreement shall be settled by binding arbitration, by one arbitrator, according to the Arizona Revised Statutes and the Arizona Rules of Civil Procedure. If the parties cannot unanimously agree upon an arbitrator, any person or entity involved in the dispute may petition the Maricopa County Superior Court for the appointment of an arbitrator. The parties to the arbitration shall split the arbitrator’s fees equally. The arbitrator’s decision shall be final and binding and may be enforced according to the Uniform Arbitration Act and/or enforced in any court of competent jurisdiction. The arbitrator may award injunctive relief and may award attorney fees and/or costs to the prevailing party or parties.

17.13 Submission of Lease

The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of or option for leasing the Premises. This document shall become effective and binding only upon execution and delivery hereof by Landlord and Tenant. No act or omission of any officer, employee or agent of Landlord or Tenant shall alter, change or modify any of the provisions hereof.

17.14 Holding Over

Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration or earlier termination of this Lease without Landlord's prior written consent, such holding over shall constitute and be construed as tenancy at sufferance only, at a monthly rent equal to two hundred percent (200%) of the Base Rent payable for the final month of the Term of this Lease and otherwise upon the terms and conditions in the Lease, so far as applicable. Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration or earlier termination of this Lease with Landlord's prior written consent, such holding over shall constitute and be construed as a tenancy from month to month only, at a fair market monthly rent as agreed by Landlord and Tenant and otherwise upon the terms and conditions of this Lease, so far as applicable. The acceptance by Landlord of Rent after such expiration or early termination shall not result in a renewal or extension of this Lease. The foregoing provisions of this Section 17.14 are in addition to and do not affect Landlord's right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law. If Tenant fails to surrender the Premises on the expiration of this Lease and/or to remove all Tenant's fixture and/or personal property pursuant to Section 9.01 hereof, Tenant shall indemnify and hold Landlord harmless for, from and against all claims, damages, loss or liability, including without limitation, any claim made by any succeeding tenant resulting from such failure to surrender by Tenant and any attorneys' fees and costs incurred by Landlord with respect to any such claim.

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17.15 Parking

Tenant shall have the right to use parking spaces or parking areas near or adjacent to the Building that are from time to time designated by Landlord for the use of Tenant and its employees. All such parking shall be on a nonexclusive, non-assigned basis. Tenant shall not use or permit its employees or invitees to use any spaces which have been specifically reserved by Landlord to other tenants or for such other uses as have been designated by appropriate governmental entities as being restricted to certain uses. Tenant shall at all times comply and cause its employees and invitees to comply with any parking rules and regulations as Landlord may from time to time reasonably adopt. At no time will Tenant use any parking spaces for storage or containers of any type or description. Landlord assumes no liability or risk for any damage that may occur to the automobile or other property of Tenant, its employees, customers or others in any parking area or Common Area of the Project.

17.16 Quiet Enjoyment

Tenant, on performing the covenants and observing the conditions of this Lease, at all times during the term shall have the peaceable enjoyment of the Premises without hindrance or disturbance by Landlord or any person claiming through or under it or any person having or claiming paramount title; provided that during the Term Landlord shall be permitted to store at the Premises, in an area of the Premises mutually agreed upon by Landlord and Tenant prior to the Commencement Date exclusively reserved to and freely accessed by Landlord without prior notice to Tenant, motors and related equipment.

17.17 Broker; Agency Disclosure

Each of Tenant and Landlord warrant that it has had no discussions, negotiations and/or other dealings with any real estate broker or agent in connection with the negotiation of this Lease other than the Broker(s) identified in Section 1.01 ("Brokers"), and that it knows of no other real estate broker or agent who is or may be entitled to any commission or finder's fee in connection with this Lease. Each of Tenant and Landlord agrees to indemnify the other and hold the other harmless from and against any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation, attorneys' fees and costs) with respect to any leasing commission or equivalent compensation alleged to be owing on account of such party's discussions, negotiations and/or dealings with any real estate broker or agent. This Section 17.17 is not intended to benefit any third parties and shall not be deemed to give any rights to brokers or finders. No commission(s) or finders fee(s) shall be paid to Tenant, employee(s) of Tenant or any unlicensed representative of Tenant.

17.18 Landlord's Right to Perform

Upon Tenant's failure to perform any obligation of Tenant hereunder after notice from Landlord pursuant to Article 13 above (if notice is required pursuant to Article 13 above), including without limitation, the Tenant's failure to pay Tenant's insurance premiums, charges of contractors who have supplied materials or labor to the Premises, etc. Landlord shall have the right to perform such obligation of Tenant on behalf of Tenant and/or to make payment on behalf of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost of Landlord's performing such obligation on Tenant's behalf, including reimbursement of any amounts that may be expended by Landlord, plus interest at the Default Rate, as Additional Rent.

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17.19 Assignment by landlord

Landlord may freely sell, assign or otherwise transfer all or any portion of its interest under this Lease or in the Premises or in the building or the land that comprise the Premises, and in the event of any such transfer, the party originally executing this Lease as Landlord, and any successor or affiliate of such party, shall be relieved of any and all of its obligations under this Lease from and after the date of such transfer, provided that Landlord is not in default of this Lease at the time of transfer. Tenant shall thereafter be bound to the transferee with the same effect as though the latter had been the original Landlord hereunder, provided that the transferee assumes and agrees to carry out all the obligations of Landlord hereunder. In the event of a sale, conveyance, or other transfer by Landlord of the Building, the Project, or portion thereof on which the Building is located, or the Project or in the event of an assignment of this Lease by Landlord, the same shall operate to release Landlord from any further liability upon any of the covenants or conditions, express or implied, herein contained on the part of Landlord, and from any and all further liability, obligations, costs and expenses, demands, causes of action, claims or judgments arising out of this Lease from and after the effective date of said release, except in regards to any prepaid rent and/or security deposit held by the landlord, which, without tenant's consent, Landlord shall remain liable to Tenant unless the new landlord has actually deposited such funds in a trust account for Tenant's benefit. In such event, Tenant agrees to look solely to the successor in interest of transferor. If any Security Deposit is given by Tenant to secure performance of Tenant's covenants hereunder, Landlord may transfer such Security Deposit to any purchaser and thereupon Landlord shall be discharged from any further liability in reference thereto. Notwithstanding anything in this Lease to the contrary, however, (i) in no event shall Landlord's lender, who may have succeeded to the interest of Landlord by foreclosure, deed in lieu of foreclosure, or any other means, have any liability for any obligation of Landlord to protect, defend, indemnify or hold harmless Tenant or any other person or entity except for those matters arising from the lender's breach of the terms of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any other means, and (ii) such succeeding lender shall have no liability for any representations or warranties of the Landlord contained herein except for those matters arising from the lender's breach of the terms of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any other means.

17.20 Entire Agreement

This Lease sets forth all covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Building and the Project, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between Landlord and Tenant other than as are herein set forth. No subsequent alteration, amendment, change or addition to the Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by Landlord and Tenant. 

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17.21 Guarantor

Tenant's obligations under this Lease are guaranteed by the Guarantor(s) identified in Exhibit E of this lease ("Guarantor"), to be evidenced by an instrument of guaranty. This Lease is not effective until such instrument has been executed and delivered by Guarantor(s) to Landlord.

17.22 Exhibits

Exhibits A through Exhibits E and any additional Exhibits added and attached to this Lease are by this reference incorporated herein.

17.23 Time

Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

17.24 Prior Agreement or Amendment

This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in the Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors-in-interest.

17.25 Excused Delays

Except as otherwise set forth in this Section 17.26, neither party shall have liability to the other on account of the following acts (each of which is an "Excused Delay" and jointly all of which are "Excused Delays")" which shall include: (a) the inability to fulfill, or delay in fulfilling, any obligations under this Lease by reason of strike, lockout, other labor trouble, dispute or disturbance; (b) governmental regulation, moratorium, action, preemption or priorities or other controls of general application; (c) shortages of fuel, supplies or labor; (d) any failure or defect in the supply, quantity or character of electricity or water furnished to the Premises by reason of any requirement, act or omission of the public utility or others furnishing the Building with electricity or water; or (e) for any other reason, whether similar or dissimilar to the above, or for act of God beyond a party's reasonable control. If this Lease specifies a time period for performance of an obligation of a party, that time period shall be extended by the period of any delay in the party's performance caused by any of the events of Excused Delay described herein; provided, that notwithstanding anything to the contrary above, no payment of money (whether as Base Rent, Additional Rent, or any other payment due under this Lease) shall be postponed, delayed or forgiven by reason of any of the foregoing events of Excused Delay.

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17.26 Authority to Bind Tenant

The individuals signing this Lease on behalf of Tenant hereby represent and warrant that they are empowered and duly authorized to bind Tenant to this Lease. If Tenant is a corporation, limited liability company or limited or general partnership, each individual executing this Lease on behalf of Tenant represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of Tenant, in accordance with a duly adopted resolution or consents of all appropriate persons or entities required therefor and in accordance with the formation documents of tenant, and that this Lease is binding upon Tenant in accordance whit its terms. Simultaneously with execution of this Lease, Tenant shall deliver to Landlord a copy of the appropriate resolution or consent, certified by an appropriate officer, partner or manager of Tenant, authorizing or ratifying the execution of this Lease.

17.27 Interpretation

The parties hereto specifically acknowledge and agree that the terms of this Lease have been mutually negotiated and the parties hereby specifically waive the rule or principle of contract construction which provides that any ambiguity in any term or provision of a contract will be interpreted or resolved against the party which drafted such term or provision.

17.28 Patriot Act Compliance

(a) Tenant represents and warrants to, and covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates currently are, or shall be at any time during the Term hereof, in violation of any laws relating to terrorism or money laundering (collectively, the "Anti-Terrorism laws"), including without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the "Executive Order") and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the "IJSA Patriot Act"). Because of the nature of the project, both parties agree that if tenant is in compliance with Arizona State Law regarding the growing, processing and sale of marijuana, then Tenant will not be considered in breach of the above mentioned laws with regards to this lease agreement as long as the purported breach was an act wholly compliant with Arizona State Law and in no way related to furthering criminal enterprises/terrorism as originally intended by the acts described.

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(b) Tenant covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates is or shall be during the Term hereof a "Prohibited Person," which is defined as follows: (i) a person or entity that is listed in the Annex to, or is otherwise subject to, the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Landlord is prohibited from dealing with or otherwise engaging in any transaction by any Anti-Terrorism Law, including without limitation the Executive Order and the USA Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or support "terrorism" as defined in Section 3(d) of the Executive Order; (v) a person or entity that is named as a "specially designated national and blocked person" on the then-most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/tllsdn.pdf, or at any replacement website or other replacement official publication of such list; and (vi) a person or entity who is affiliated with a person or entity listed in items (i) through (v), above.

(c) At any time and from time-to-time during the Term, Tenant shall deliver to Landlord, within ten (10) days after receipt of a written request therefor, a written certification or such other evidence reasonably acceptable to Landlord evidencing and confirming Tenant's compliance with this Section 17.28 at Landlord's expense, including legal costs for obtaining said documentation that is satisfactory to the request.

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

LANDLORD:		TENANT:
Chino Valley Properties, LLC		CCC Holdings, LLC
By	/s/ Bryan McLaren	By	/s/ Alan Abrams
Its	Duly Authorized Agent	Its	Its Duly Authorized Agent

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TENANT'S ACKNOWLEDGMENT

STATE OF ARIZONA	)
	) SS.
COUNTY OF MARICOPA

I certify that I know or have satisfactory evidence that the person appearing before me and making this acknowledgement is the person whose true signature appears on this document.

On this Date: August 6, 2015, before me personally appeared Bryan McLaren, to me known to be the officer of Chino Valley Properties, the Corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

/s/ Brandon Baenke

[Type or Print Notary Name]

/s/ Brandon Baenke

(Use This Space for Notarial Seal Stamp)

[SEAL]

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LANDLORD'S ACKNOWLEDGEMENT  

STATE OF ARIZONA	)
	) SS.
COUNTY OF MARICOPA

I certify that I know or have satisfactory evidence that the person appearing before me and making this acknowledgement is the person whose true signature appears on this document.

On this Date: August 6, 2015, before me personally appeared Alan Abrams, to me known to be the Authorized Agentof CCC Holdings, LLC, the Corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

 /s/ Brandon Baenke

[Type or Print Notary Name]

/s/ Brandon Baenke

(Use This Space for Notarial Seal Stamp)

[SEAL]

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EXHIBIT A: LEASE COMMENCEMENT 

Lease Agreement will commence as of August 1, 2015. The Landlord will waive the first month’s rent. The first rental payment and security deposit will be made on September 1, 2015.

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EXHIBIT B: RENTAL PAYMENT SCHEDULE  

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EXHIBIT C: PROPERTY SITE AND LEGAL DESCRIPTION  

Parcel ID:	306-14-008-M
Property Address:	2144 & 2148 N. Road 1 East Chino Valley, AZ 83462
Building and Premises:	Chino Valley Cultivation Site; approximately 10,000 square feet of completed Greenhouse and approximately 5,000 square feet of existing office & garage space existing within the currently fenced in area. Approximately 11 acres.
Legal Description:	An irregular portion of the SE4 the SE parcel corner lying approximately 686'N and 50'W from the SE corner of said section 19

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EXHIBIT D: TENANT OPTION TO EXTEND LEASE TERM AND FIRST RIGHT 

OPTION TO EXTEND. Tenant shall, provided the Lease is in full force and effect and Tenant is not in default under any of the terms and conditions of the Lease at the time of notification or commencement, have two (2) options to extend this Lease for a term of five (5) years as of the date the extension term is to commence, on the same terms and conditions set forth in the Lease, except as modified by the terms, covenants and conditions as set forth below:

(a) If Tenant elects to exercise said option, then Tenant shall provide Landlord with written notice no earlier than the date which is 12 months (12) months prior to the expiration of the term of the Lease but no later than the date which is six (6) months prior to the expiration of the term of the Lease. If Tenant fails to provide such notice, Tenant shall have no further or additional right to extend or renew the term of the Lease.

(b) The Annual Rent in effect at the expiration of the term of the Lease shall be adjusted to reflect the current Base Rent plus 5% increase annually.

(c) This option is not transferable; the parties hereto acknowledge and agree that they intend that the aforesaid option to extend this Lease shall be “personal” to Tenant as set forth above and that in no event will any assignee or sublessee have any rights to exercise the aforesaid option to extend.

FIRST RIGHT. Landlord may not sell or transfer the Property, except to an Affiliate of Landlord, unless Landlord has received a bona fide offer to purchase the Property (whether solicited or not) and Landlord provides Tenant a right of first refusal to purchase the Property pursuant to the following provisions of this Agreement.

(a) Landlord shall give Tenant at least thirty (30) days’ prior written notice of any proposed sale of the Property. Such notice shall be accompanied by a copy of an executed, legally binding purchase agreement (the “Third Party Purchase Agreement”) between Landlord and the proposed purchaser setting forth the terms and conditions of such proposed sale.

(b) Tenant shall have the right, but not the obligation, to cause Landlord to sell the Property to it on the same terms as are described in the Purchase Agreement by notifying Landlord, within thirty (30) days of the receipt of such notice, of its intention to purchase the Property and by executing and delivering to Landlord a purchase contract for the purchase of the Property on the same terms and conditions as the Third Party Purchase Agreement, except that the date for settlement of the purchase of the Property shall be either the settlement date set forth in the Third Party Purchase Agreement or a date which is not less than ninety (90) days from the date of Landlord’s notice to Tenant of the Third Party Purchase Agreement, whichever is later.

(c) If Tenant does not give timely notice of its intention to purchase the Property or, having given such notice, does not purchase the Property, Landlord may then sell the Property to the proposed purchaser named in the Purchase Agreement on the terms set forth in the Purchase Agreement. If Landlord does not then sell and convey the Property as provided for in the Purchase Agreement, any further transaction shall be deemed a new determination by Landlord to sell and convey the Property and the provisions of this Article I shall be applicable thereto.

(d) If Tenant purchases the Property pursuant to this Article I, this Lease shall terminate on the date title vests in Tenant, and Landlord shall remit to Tenant all prepaid and unearned rent, and any security deposit paid by Tenant pursuant to the Lease.

(e) This right of first refusal shall remain in effect for the entire term of this Lease and shall be applicable to any sale of the Property by the Landlord, its successors, or its assigns.

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EXHIBIT E: GUARANTY OF PAYMENT AND PERFORMANCE

The undersigned Guarantors hereby unconditionally guaranty the full payment and performance of each and every term, covenant and condition of that certain Commercial Lease Agreement by and between Chino Valley Properties, LLC, as Landlord, and CCC Holdings, LLC, as Tenant, to be performed by Tenant including, but not limited to the payment of the monthly rent to Landlord and the performance of all obligations of Tenant with regard to the “Premises” described in the Lease. The undersigned further agree that this Guaranty shall not be released, diminished or otherwise affected by any assignment, subletting or transfer of the business at issue or the leased premises or by the bankruptcy, reorganization or insolvency of Tenant or of any successor(s) or assignee(s) of Tenant or by the granting of extensions of time by the owner(s) of the Premises at issue for performance of any of the terms and provisions of said Lease.

The liability of the undersigned under this Guaranty shall be primary and, in any right of action which shall accrue to Landlord and/or to its successors and/or assigns under said lease, Landlord and/or its successors and/or assigns, Landlord, its successors and/or assigns may, at their option, proceed against the undersigned without having commenced any action against Tenant or against any successors or assigns of Tenant. The undersigned agree to pay Landlord’s reasonable attorney fees, all reasonable costs and all other reasonable expenses incurred in enforcing this Guaranty, regardless of whether a lawsuit is filed or contested.

The undersigned hereby waive notice of any demand by Landlord, its successor and/or assigns, as well as any notice of default given to Tenant or to any successor(s) or assign(s) of Tenant. The undersigned waive any right, statutory or otherwise, to be discharged from liability hereunder by reason of Landlord=s failure, after demand from the undersigned, to bring suit against Tenant. The undersigned Guarantors or assignee(s) of Tenant waive Landlord’s written acceptance of this Guaranty.

________________________________	_____________________
Alan Abrams, Individually	Date
SUBSCRIBED AND SWORN to before me this ____ day of.
	______________________________
	Notary Public

My commission expires:
STATE OF ARIZONA	)
	) ss.
County of Maricopa	)

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EX-10.8

Exhibit 10.8

FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT

This First Amendment to the Commercial Lease Agreement (the “FIRST AMENDMENT” ) is made this 25^th day of of September, 2015, (the “EFFECTIVE” DATE) by and between Chino Valley Properties, LLC., CCC Holdings, LLC. And Alan Abrams, Individually as Personal Guarantor.

WITNESSETH:

WHEREAS, Landlord and Tenant heretofore entered into a Commercial Lease Agreement (the “LEASE”) executed and effective as of August 6, 2015 for the lease on the facilities commonly known as 2144 & 2148 N. Road 1 East Chino Valley, AZ 83462; and

WHEREAS, The parties hereto desire to change the name of the current tenant name from CCC Holdings, LLC to C3C3 Group, LLC.

WHEREAS, all defined terms used in the Lease shall have the same meaning herein as therein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for good and valuable consideration, the sufficiency and receipt of which is acknowledged, the Parties agree as follows:

1. Tenant Name. The Tenant Name to be C3C3 Group, LLC.

Your signature below will indicate that you agree to the basic terms and conditions as set forth herein.

Chino Valley Properties, LLC.		CCC Holdings, LLC.
By:		By:
Name:		Name:
Title:		Title:
Alan Abrams, Individually.		C3C3 Group, LLC.
By:		By:
Name:		Name:
Title:	Personal Guarantor	Title:

EX-10.9

Exhibit 10.9

LICENSED CULTIVATION PROJECT: TEMPE

ZONED PROPERTIES, INC. NNN LEASE AGREEMENT

ZONED PROPERTIES, INC.

(Landlord)

&

CCC HOLDINGS, LLC

(Tenant)

DATED: August 15, 2015

Initials:

TABLE OF CONTENTS

LICENSED MARIJUANA CULTIVATION FACILITY	5
LICENSED MARIJUANA PROJECT COMPLIANCE AGREEMENT	6
ARTICLE 1: RECITALS	7
1.01 Defined Lease Agreement Terms	7
ARTICLE 2: PREMISES AND COMMON AREAS LEASED	8
2.01 Premises	8
ARTICLE 3: COMPLIANCE WITH LAW; AS IS	8
3.01 Compliance with Law; AS IS	8
ARTICLE 4: LEASE TERM	9
4.01 Lease Commencement.	9
ARTICLE 5: RENTAL PAYMENTS	9
5.01 Base Rent	9
5.02 Additional Rent	10
5.03 Late Payment	10
5.04 Prepaid Rent	10
5.05 Security Deposit	11
ARTICLE 6: ADDITIONAL RENT AND CHARGES	11
6.01 Real Property Taxes	11
6.02 Tenant's Personal Property Taxes	12
6.03 Rental Taxes	12
6.04 Common Areas, Management, and Rental Charges	12
ARTICLE 7: INSURANCE	14
7.01 Tenant's Insurance	14
7.02 Form of Insurance Certificates	15
7.03 Tenant's Failure	15
7.04 Waiver of Subrogation	15
7.05 Tenant's Properties and Fixtures	16
7.06 Indemnification	16
7.07 Damage to Tenant's Property	17
ARTICLE 8: REPAIRS AND MAINTENANCE	18
8.01 Landlord Repairs and Maintenance	18
8.02 Utilities and Services	18
8.03 Tenant Repairs and Maintenance	19
8.04 Non-liability of Landlord	19
8.05 Inspection of Premises	19

Initials:

2

ARTICLE 9:  FIXTURES, PERSONAL PROPERTY ALTERATIONS	20
9.01 Fixtures and Personal Property	20
9.02 Alterations	21
9.03 Liens	22
ARTICLE 10: USE AND CONFLUENCE WITH APPLICABLE LAW	22
10.01 Premises Use and Confluence with Applicable Law	22
10.02 Hazardous Materials	23
10.03 Signs	25
ARTICLE 11: DAMAGE AND DESTRUCTION	25
11.01 Reconstruction	25
11.02 Excessive Damage or Destruction	25
11.03 Uninsured Casualty	26
11.04 Waiver	26
11.05 Mortgagee's Right	26
11.06 Damage Near End of Term	26
ARTICLE 12: EMINENT DOMAIN	27
12.01 Condemnation & Eminent Domain	27
ARTICLE 13:  DEFAULT	27
13.01 Events of Default	27
13.02 Remedies	28
13.03 Landlord's Default	30
ARTICLE 14:  FILING OF PETITION	30
14.01 Tenant's Bankruptcy	30
ARTICLE 15: ASSIGNMENT AND SUBLETTING	32
15.01 Prohibition	32
15.02 Excess Rental	32
15.03 Scope	32
15.04 Waiver	33
15.05 Change in Control	33
ARTICLE 16:  ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION	33
16.01 Estoppel Certificate	33
16.02 Attornment	34
16.03 Subordination	34
16.04 Recording	34
ARTICLE 17: MISCELLANEOUS	35
17.01 Notices	35
17.02 Successors Bound	35
17.03 Waiver	35
17.04 Subdivision and Easements	36
17.05 Landlord's Reserved Rights in Common Areas	36
17.06 Accord and Satisfaction	36
17.07 Limitation of Landlord's and Tenant's personal liabilities	36
17.08 Survival	37
17.09 Attorneys' Fees	37

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17.10 Captions and Article Numbers	37
17.11 Severability	37
17.12 Governing Law, Dispute Resolution and Venue	37
17.13 Submission of Lease	38
17.14 Holding Over	38
17.15 Parking	39
17.16 Quiet Enjoyment	39
17.17 Broker; Agency Disclosure	39
17.18 Landlord's Right to Perform	40
17.19 Assignment by landlord	40
17.20 Entire Agreement	41
17.21 Guarantor	41
17.22 Exhibits	41
17.23 Time	41
17.24 Prior Agreement or Amendment	41
17.25 Excused Delays	41
17.26 Authority to Bind Tenant	42
17.27 Interpretation	42
17.28 Patriot Act Compliance	42
EXHIBIT A: LEASE COMMENCEMENT	46
EXHIBIT B: RENTAL PAYMENT SCHEDULE	47
EXHIBIT C: PROPERTY SITE AND LEGAL DESCRIPTION	48
EXHIBIT D: TENANT OPTION TO EXTEND LEASE TERM AND FIRST RIGHT	49
EXHIBIT E: GUARANTY OF PAYMENT AND PERFORMANCE	50

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LICENSED MARIJUANA CULTIVATION FACILITY

TRIPLE NET (NNN) LEASE AGREEMENT 

This LEASE ("Lease" or “Lease Agreement”) dated, August 1, 2015, is made by and between Zoned Properties, Inc. a Nevada corporation authorized to transact business in Arizona ("Landlord" or “Lessor”), and CCC Holdings, LLC ("Tenant" or “Lessee”).

Net, Net, Net Lease. Tenant understands and agrees that this Lease is what is commonly referred to as a “Net, Net, Net” Lease, NNN, or triple net lease. Tenant recognizes and acknowledges, without limiting the generality of any other terms or provisions of this lease, that it is the intent of the parties hereto that any and all rentals in this lease provided to be paid be Tenant to Landlord, shall be net to the Landlord, and any and all expenses incurred in connection with the Common Areas, the Premises, and the Center or in connection with the operations thereon, including any and all taxes, assessments, general or special, license fees, insurance premiums, public utility bills, management and administrative fees and costs of repair, maintenance and operation of the Common Areas, the Premises, and the Center and all buildings, structures, permanent textures and other improvements comprised therein, together with the appurtenance thereto, shall be paid by Tenant.

In the event that the Landlord is specifically advised in writing by any federal, state or local government that Landlord is subject to seizure of his its property, if it does not terminate Tenant’s right to cultivate marijuana upon the Leased Premises, or if the Arizona Medical Marijuana Act (AMMA) is declared to be unenforceable or is modified to prohibit the sale or cultivation of medical marijuana upon the Leased Premises, or if any other zoning regulation, rule or regulation is modified to prohibit sale, cultivation or possession of marijuana upon the Leased Premises, Landlord or may terminate this Lease.

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LICENSED MARIJUANA PROJECT COMPLIANCE AGREEMENT 

1. Lessee acknowledges that neither the lessor nor lessor’s representatives have made any oral or written representations or warranties whatsoever concerning the suitability or zoning of the property with respect to its potential use as a medical marijuana facility, and that it is the sole responsibility of the Lessee to investigate and to satisfy itself concerning the suitability of the property for such use.

2. Lessee understands and agrees that Lessee, and not Lessor, shall be solely responsible at the Lessee’s own expense for full compliance with all state and local laws, rules, regulations and ordinances pertaining to the maintenance and/or operation of a medical marijuana cultivation facility.

3. Lessee warrants and represents that it is eligible and qualified to operate a medical marijuana facility in the property under all applicable state and local laws rules, regulations and ordinances, and that Lessee has obtained all legally required licenses, permits, and approvals to do so before commencing operations on the property.

4. Lessee shall indemnify, defend and hold harmless Lessor, its trustees, agents, employees, and lenders from and against all damages, liabilities, judgments, claims, expenses, penalties, and attorney and consultant fees arising out of or connected in any way to Lessee’s violation or alleged violation of any federal, state, or local law, rule, regulation or ordinance, whether or not litigation or prosecution is actually commences against Lessor, its trustees, agents, employees or lenders.

5. Lessee shall provide notice to Lessor immediately in the event of the revocation, suspension, expiration, transfer, or surrender of Lessee’s lawful authority to operate a medical marijuana facility. Such revocation, suspension, expiration, transfer or surrender, or Lessee’s failure to provide immediate notice thereof to Lessor, shall constitute a Breach of the Lease entitling Lessor at its sole discretion to terminate the lease agreement.

LANDLORD:		TENANT:
Zoned Properties, Inc		CCC Holdings, LLC
By	/s/ Bryan McLaren	By	/s/ Alan Abrams
	Its Duly Authorized Agent		Its Duly Authorized Agent

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ARTICLE 1: RECITALS

1.01 Defined Lease Agreement Terms

WHEREAS, The following terms shall have the meanings specified in this Section, unless otherwise specifically provided. Other terms may be defined in other parts of the Lease.

(A) Landlord	Zoned Properties, Inc.
(B) Landlord’s Address	Zoned Properties, Inc. 14300 N. Northsight Blvd #208 Scottsdale, Arizona 85260
(C) Tenant	CCC Holdings, LLC
(D) Tenants Address	CCC Holdings, LLC c/o AC Management Group, LLC 7950 E. Acoma Dr. #204 Scottsdale, Arizona 85260
(E) Tenant Use	Marijuana cultivation and processing in accordance with the laws of the State of Arizona, applicable licensure requirements, and the regulations and uses incidental thereto
(F) Building & Premises	Tempe Cultivation Site; approximately 5,000 square feet of warehouse as described in Exhibit C
(G) Property	Real Property described in Exhibit C
(H) Term	Two Hundred Forty (240) Months commencing as of the Commencement Date described in the attached Exhibit A
(I) Commencement Date	Exhibit A
(J) Base Rent	Exhibit B
(K) Prepaid Rent	None
(L) Security Deposit	$20,000
(M) Landlord Broker	None
(N) Tenant Broker	None

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ARTICLE 2: PREMISES AND COMMON AREAS LEASED

2.01 Premises

(a) Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from landlord, subject to the provisions of this Lease, certain premises described in Exhibit C (the "Buildings" or the “Premises”) owned by Landlord. The Site Plan for the Project attached to this Lease as Exhibit C is attached for general reference purposes only and shall not constitute a representation or warranty by Landlord to be the final plan of the Project or Building, location of the Building, or to require Landlord to build any improvements, or to otherwise comply with the site plan or require Landlord to lease space to a particular tenant or type of tenant.

(b) Measurement of Premises. The terms "Rentable Area of the Premises," "rentable square feet," "actual square footage" and words of similar importance (whether or not spelled with initial capitals) as used in this Lease will be defined as the total floor area constituting the Premises as measured from the unfinished outside of the exterior Building walls to the unfinished outside of like exterior Building walls. "Rentable Area of the Premises" shall also include any mezzanine space as measured from the outside of the exterior Building walls to like outside exterior Building walls and from outside exterior Building walls to the termination of the mezzanine deck. Tenant acknowledges that, except as otherwise expressly set forth in this Lease Agreement, neither Landlord nor any agent, property manager or broker of Landlord has made any representation or warranty with respect to the Premises, the Building, the Common Areas or the Project or their suitability for the conduct of Tenants business.

ARTICLE 3: COMPLIANCE WITH LAW; AS IS 

3.01 Compliance with Law; AS IS

Tenant accepts the Premises strictly on an “AS IS” basis, without any representations or warranties from Landlord. Tenant agrees to be compliant with all applicable rules/laws/regulations in effect, or subsequently passed into effect, as of and after the Commencement Date.

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Tenant, at its sole cost and expense, shall promptly observe and materially comply with all present and future laws, orders, regulations, rules, ordinances and requirements of any governmental agency with respect to the use, care and control of the Premises. Without limiting the generality of the foregoing, Tenant shall make any structural changes or additions to the Premises that are required, in order to comply with the requirements of its business operations. Landlord makes no representations or warranties to Tenant, and hereby disclaims any and all representations or warranties to Tenant, concerning the Premises, including without limitation, that as of the Commencement Date the Premises are (a) in compliance with all federal, state and local laws, regulations and directives for Tenant's intended use of the Premises, including without limitation the Environmental Laws, but excluding the Americans With Disabilities Act; and (b) free from and of all hazardous materials, including without limitation asbestos, lead paint and polychlorinated biphenyl; provided that Landlord represents and warrants to Tenant that Landlord has no actual knowledge, without having made any investigation or inquiry, of any present violation by the Premises of any of the Environmental Laws. "Environmental Laws" shall include, but not be limited to, the Resource, Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq.; the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 201,300f to j-9 and any and all environmental laws of the State of Arizona and any and all amendments to such Environmental Laws. Tenant agrees to hold harmless Landlord, and hereby waives all rights and claims of contribution against Landlord, with respect to any violations or alleged violations of Environmental Laws or any other federal, state and local laws, regulations and directives concerning the Premises which arise as a result of Tenant’s activities at the Premises. 

ARTICLE 4: LEASE TERM

4.01 Lease Commencement.

The duration of the period of this Lease (the “Term”) shall commence on the date of delivery of possession of the Premises (the "Lease Commencement Date") as outlined in Exhibit A and shall, subject to the right of the Tenant reserved hereunder to extend that duration, run for a period of two hundred forty (240) months therefrom. Notwithstanding the foregoing, in the event the Landlord is delayed in the delivery of the Premises to Tenant due to a Tenant Delay, the Commencement Date shall be deemed to have occurred on the date on which the Landlord would have been able to deliver the Premises to the Tenant absent the Tenant caused delay. 

ARTICLE 5: RENTAL PAYMENTS

5.01 Base Rent

The Base Rent ("Base Rent") shall be as set forth in Exhibit B and is adjusted annually as of each Anniversary Date as defined and as set forth in Exhibit B. The Base Rent shall be paid in advance on the first day of each and every month during the Term to Landlord at the address set forth in Section 1.01 hereof or at such other place as Landlord may direct in writing, without any prior notice or demand therefor and without any abatement, deduction, offset or setoff whatsoever unless permitted by law or otherwise permitted in this lease. If the Term commences on any day other than the first day of a calendar month and/or ends on any day other than the last day of a calendar month, Base Rent for the fraction(s) of a month at the commencement and/or upon the expiration of the Term shall be prorated based upon the actual number of days in such fractional month(s). 

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5.02 Additional Rent

In addition to Base Rent, Tenant shall pay to Landlord all sums of money or other charges required to be paid by the Tenant under this Lease (other than Base Rent and the Prepaid Rent), including but not limited to Tenant's Share of Operating Expenses (as defined in Article 6 hereof) (all such sums being herein deemed "Additional Rent''), and whether or not the same are designated "Additional Rent" the same shall be payable in lawful money of the United States of America without deduction, set-off or abatement whatsoever unless permitted by law or otherwise permitted in this lease. Any Additional Rent provided for in this Lease shall become due with the next monthly installment of Base Rent unless otherwise provided. The term "Rent" as used in this Lease, shall refer collectively to "Base Rent" and "Additional Rent."

5.03 Late Payment

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 12% of each such overdue amount plus $25 per day for each day late after five (5) days. 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.

Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 31st day after it was due. The interest ("Interest") charged shall be computed at the rate of 12% per annum but shall not exceed the maximum rate allowed by law.

5.04 Prepaid Rent

There will be no Prepaid Rent.

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5.05 Security Deposit

As of the parties’ execution of this Lease, Tenant shall deliver the Security Deposit in the amount of $20,000 to Landlord paid over twelve months beginning September 1, 2015 as $1,666.67 consistent with Section 1.01 as partial security for the performance by Tenant of the provisions of this Lease. In the event of any Default by Tenant under this Lease, Landlord shall have the right to apply all or any portion of the Security Deposit to cure the Default and reinstate this Lease, or to otherwise compensate Landlord for all damages sustained by Landlord resulting from or in connection with such Default. In the event of any such application of the Security Deposit by Landlord, Tenant shall upon demand deliver to Landlord the sum required to restore the Security Deposit to the amount set forth in Section 1.01. Provided that Tenant is not in Default at the expiration or termination of this Lease, Landlord shall return any remaining portion of the Security Deposit to Tenant within thirty (30) days after the date of such expiration or termination. Landlord's rights with respect to the Security Deposit are those of a trustee. Landlord shall be entitled to commingle the Security Deposit with Landlord's general funds and shall have no obligation to pay Tenant interest on the Security Deposit. In the event of a transfer of Landlord's interest in this Lease during the Term hereof, provided Landlord transfers the then unapplied Security Deposit to the transferee and the transferee agrees and actually does deposit the check to a trust account held for the sole use of this provision, Landlord shall be discharged from any further liability with respect to the Security Deposit. 

ARTICLE 6: ADDITIONAL RENT AND CHARGES

6.01 Real Property Taxes

For purposes of this Lease, "Real Property Taxes" shall consist of all real estate taxes, leasehold excise taxes and all other taxes relating to the Building, the Common Areas and/or the Project, as applicable, all other taxes which may be levied in lieu of real estate taxes, all assessments, local improvement districts, assessment bonds, levies, fees and other governmental charges, including, but not limited to, charges for traffic facilities and improvements, water service studies, and improvements or amounts necessary to be expended because of governmental orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits, or any other purpose, which are assessed, levied, confirmed, imposed or become a lien upon the Building or any portion of the Project, the Property and/or the Common Areas, or become payable during the Term (or which become payable after the expiration or earlier termination hereof and are attributable in whole or in part to any period during the Term hereof), together with all costs and expenses incurred by Landlord in successfully contesting, resisting or appealing any such taxes, rates, duties, levies or assessments, "Real Property Taxes" shall exclude any franchise, estate, inheritance or succession transfer tax of Landlord, or any federal or state income, profits or revenue tax or charge upon the net income of Landlord from all sources; provided, however, that if at any time during the Term there is levied or assessed against Landlord a federal, state or local tax or excise tax on rent, or any other tax however described on account of rent or gross receipts or any portion thereof, Tenant shall pay one hundred percent (100%) of the Tenant's Share of any said tax or excise applicable to Tenant's Rent as Additional Rent. 

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Together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the prior calendar year’s real property taxes and assessments with respect to the Premises and one-twelfth (1/12^th) of the then current calendar’s year’s association assessments and fees (if any) with respect to the Premises each month. Subject to such payment, Landlord shall pay such taxes, assessments and fees to the respective taxing authority and office association. In addition, Tenant shall pay all personal property taxes with respect to any property of Tenant or any subtenant in or upon the Premises prior to delinquency and directly to the respective taxing authority on or before the last day upon which the same may be paid without interest or penalty, and Tenant shall deliver to Landlord reasonable documentation evidencing Tenant’s compliance with the foregoing payment obligations.

6.02 Tenant's Personal Property Taxes

Tenant shall pay or cause to be paid, prior to delinquency, any and all taxes and assessments levied upon all trade fixtures, inventories and other real or personal property placed or installed in and upon the Premises by Tenant. If any such taxes on Tenant's personal property or trade fixtures are levied against Landlord or Landlord's property or if the assessed value of the Building is increased by the inclusion therein of a value placed upon such real or personal property or trade fixtures of Tenant, and if Landlord pays the taxes based upon such increased assessment, Tenant shall, upon demand, repay to Landlord the taxes so levied or the portion of such taxes reusing from such increase in the assessment.

6.03 Rental Taxes

In addition to the Rent which Tenant is required to pay Landlord herein, Tenant shall pay Landlord all transaction privilege, sales, rental and/or other taxes or licenses (but excluding income or estate taxes charged against Landlord) levied upon or assessed against Landlord by any governmental authority having jurisdiction, which are measured by the Rent or other charges in any form paid by Tenant to Landlord hereunder. The amount required to be paid by Tenant to Landlord pursuant to the immediately preceding sentence shall be paid at the time the applicable Rent is due or other charges are due and shall be considered as payment of taxes or licenses, as the case may be, and not for the payment of Rent.

6.04 Common Areas, Management, and Rental Charges

(a) The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project and interior utility raceways and installations within the Unit that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas.

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(b) Lessee’s Share of Common Area Operating Expenses: Common Area rental charge will be Four Percent (4%) of Base Rental Charge (“Lessee’s Share”). In the event that the size of the Premises and/or the Project are modified during the term of this Lease, Lessor may recalculate Lessee’s Share to reflect such modification.

(c) Compliance: Lessor warrants that to the best of its knowledge the improvements on the Premises and the Common Areas 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 or to any Alterations or Utility Installations made or to be made by Lessee.

(d) Control and Management: Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Project and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Project.

(e) Lessor shall have the right, in Lessor's sole discretion, from time to time:

i. To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

ii. To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

iii. To designate other land outside the boundaries of the Project to be a part of the Common Areas;

iv. To add additional buildings and improvements to the Common Areas;

v. To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and

vi. To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be appropriate.

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ARTICLE 7: INSURANCE

7.01 Tenant's Insurance

Tenant shall, at its own cost and expense, keep and maintain in full force during the Term and any other period of occupancy of the Premises by Tenant, the following types of insurance with insurance companies approved to engage in business in the State of Arizona, and reasonably approved by Landlord, in the amounts specified and in the form hereinafter provided for:

(a) Fire, casualty and extended coverage insurance on Tenant's fixtures, improvements and other property for not less than the full replacement value, together with business interruption coverage, as Landlord may reasonably require. Such policy shall contain an agreed amount endorsement in lieu of a coinsurance clause.

(b) Commercial liability insurance insuring Tenant against any liability arising out of the lease, use, occupancy or maintenance of the Premises and all areas appurtenant thereto or business operated by Tenant pursuant to the Lease, including that from personal injury or property damage in or about the Premises, insuring Landlord, and any designated mortgagee of Landlord, and Tenant, and naming Landlord and any designated mortgagee of Landlord as an additional insured therein. Such insurance shall be in the minimum amounts of not less than $1,000,000 per occurrence against liability for bodily injury including death and personal injury for any single (1) occurrence and not less than $1,000,000 per occurrence for property damage, or combined single limit insurance insuring for bodily injury, death and property damage in an amount of not less than $2,500,000. The policy shall insure the hazards of the Premises and Tenant's operations therein, shall include independent contractor and contractual liability coverage (covering the indemnity contained in Section 7.06 hereof) and shall (a) name Landlord, Landlord's managing agent and the Landlord's mortgagee under a mortgage or beneficiary under a deed of trust either having a first lien against the Building or Project (the "Lender") as an additional insured; (b) contain a cross-liability provision; and (c) contain a provision that the insurance provided hereunder shall be primary and non-contributing with any other insurance available to Landlord.

(c) Workers' compensation insurance for the benefit of all employees entering upon the Premises as a result of or in connection with the employment by Tenant;

(d) Such other forms of insurance as may be reasonably required to cover future risks against which a reasonably prudent Landlord or Tenant would protect itself.

Landlord may from time to time amend this Lease Agreement to require increased insurance coverage by the Tenant if in the Landlord's reasonable discretion, the same is necessary to adequately insure Tenant's activities in the Premises or as any Mortgagee may reasonably require. 

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7.02 Form of Insurance Certificates

All policies shall be written in a form satisfactory to Landlord and shall be written by insurance companies licensed with a Best’s rating and Financial Size Category Rating of "A++" and authorized to do business in the state in which the Building is situated. Tenant shall furnish to Landlord, prior to Tenant's entry into the Premises and thereafter within thirty (30) days prior to the expiration of each such policy (or renewal thereof), a certificate of insurance issued by the insurance carrier of each policy of insurance carried by Tenant pursuant hereto, together with a copy of the policy declaration page(s), certifying that such policy(ies) has been issued, provides coverage required by this Article 7 (including name of additional insured entities as required by this Article 7 and a statement that no deductible or self-insurance retention applies to such policy and upon request by Landlord, a copy of each such policy of insurance.

7.03 Tenant's Failure

If Tenant fails to maintain any insurance required in the Lease, Tenant shall be liable for any loss or cost resulting from said failure, and Landlord shall have the right to obtain such insurance on Tenant's behalf and at Tenant's sole expense, the cost of which, plus a fifteen percent (15%) administrative fee, shall be deemed Additional Rent and shall be payable upon Landlord’s demand. This Section 7.03 shall not be deemed to be a waiver of any of Landlord's rights and remedies under any other Section of this Lease. If Landlord obtains any insurance, which is the responsibility of Tenant to obtain under this Article 7, Landlord agrees to deliver to Tenant a written statement setting forth the cost of any such insurance and any administrative fee charged as provided for under this Section of this Lease.

7.04 Waiver of Subrogation

Each policy evidencing insurance required to be carried by Tenant pursuant to this Article 7 shall contain the following clauses and provisions: (i) that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord and that any coverage carried by Landlord be excess insurance; (ii) including Landlord and the parties set forth in Article 7 of this Lease and any other parties designated by Landlord from time to time as additional insured entities; (iii) a waiver by the insurer of any right to subrogation against Landlord and other additional insured entities, its or their agents, employees and representatives which arises or might arise by reason of any payment under such policy(ies) or by reason of any act or omission of Landlord, its agents, employees or representatives; (iv) a severability of interest clause or endorsement; and (v) that the insurer will not cancel or change the coverage provided by such policy without giving Landlord thirty (30) days' prior written notice. Any policy of insurance required to be carried by Tenant that names the parties set forth in this Article 7 as additional insured entities shall not be subject to a deductible or self-insured retention, it being the intent of the parties that such insurance shall fully and completely insure such additional insured entitles for all loss or expense.

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7.05 Tenant's Properties and Fixtures

Tenant assumes the risk of damage to any furniture, equipment, machinery, goods, supplies or fixtures which are or remain the property of Tenant or as to which Tenant retains the right of removal from the Premises, except to the extent due to the negligent act or omission, or willful misconduct of Landlord. Tenant shall not do or keep anything in or about the Premises, which will in any way tend to increase insurance rates paid by Landlord and maintained with respect to the Premises and/or the Project unless Tenant pays directly to Landlord the increase cost of the premiums. In no event shall Tenant carry on any activities, which would invalidate any insurance coverage maintained by Landlord. If Tenant's occupancy or business in, or on, the Premises, whether or not Landlord has consented to the same, results in any increase in premiums for the insurance carried by Landlord with respect to the Building and/or the Project, Tenant shall pay any such increase in premiums as Additional Rent within ten (10) days after being billed therefore by Landlord. In determining whether increased premiums are a result of Tenant’s use of the Building, a schedule issued by the organization computing the insurance rate on the Building and/or the Project showing the various components of such rate shall be conclusive evidence of the several items and charges which make up such rate. Tenant shall promptly comply with all reasonable requirements of the insurance underwriters and/or any governmental authority having jurisdiction there over, necessary for the maintenance of reasonable fire and extended insurance for the Building and/or the Project.

7.06 Indemnification

(a) Tenant, as a material part of the consideration to be rendered to Landlord, hereby indemnifies and agrees to defend and hold Landlord, Landlord's managing agent and Lender, the Premises and the Project harmless for, from and against (i) any and all liability, penalties, losses, damages, costs and expenses, demands, causes of action, claims, judgments or appeals arising from any injury to any person or persons or any damage to any property resulting from Tenant's or Tenants' officers, employees, agents, assignees, subtenants, concessionaires, licensees, contractors or invitees' use, maintenance, occupation, operation, control of, or entry upon the Premises or into the Building during the Term, or resulting from any breach or default in the performance of any obligation to be performed by Tenant hereunder or for which Tenant is responsible under the terms of this Lease or pursuant to any governmental or insurance requirement, or to the extent arising from any act, neglect, fault or omission of Tenant or any of Tenant's officers, employees, agents, servants, subtenants, concessionaires, licensees, contractors or invitees, and (ii) from and against all costs and charges, including reasonable attorneys' and other reasonable professional fees, incurred in and about any of such matters and the defense of any action arising out of the same or in discharging the Project, the Property, the Building and/or Premises, or any part or any thereof, from any and all liens, charges or judgments which may accrue or be placed thereon by reason of any act or omission of the Tenant.

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(b) In the event of the concurrent negligence of Tenant, its sublessees, assignees, invitees, agents, employees, contractors, or licensees on the one hand, and the negligence of Landlord, its agents, employees or contractors on the other hand, which concurrent negligence results in injury or damage to persons or property of any nature and howsoever caused, and relates to the construction, alteration, repair, addition to, subtraction from, improvement to or maintenance of the Project, Building, Common Areas or Premises such that Section 4.24.115 Revised Code of Arizona (“RCI”) is applicable, then Tenant's obligation to indemnify Landlord shall be limited to the extent of Tenant's negligence and that of Tenant’s officers, sublessees, assignees, invitees, agents, employees, contractors or licensees, including Tenant's proportional share of costs, reasonable attorneys' fees and expenses incurred in connection with any claim, action or proceeding brought with respect to such injury or damage. If Tenant elects to assert its industrial insurance immunity under title 51 of the RCI, and such assertion is inconsistent with the right of the Landlord to indemnification pursuant to this Lease, Landlord shall retain its right to indemnity hereunder and, correspondingly, Tenant shall remain liable to Landlord as indemnitor. This Section of this Lease has been mutually negotiated by Landlord and Tenant and relates only to Tenant’s waiver of immunity with under industrial insurance, Title 51 RCI, and not to any third party, including any injured employee of Tenant.

(c) In no event shall Landlord, its agents, employees and/or contractors are liable for any personal injury or death or property damage caused by other lessees or their agents, as the case may be, or caused by public or quasi-public work, or for consequential damages arising out of any loss of the use of the Premises or any equipment or facilities therein by Tenant or any person claiming through or under Tenant except if such tenant and/or employee, agent and/or contractor was directed or instructed by landlord, its agents, employees and/or contactors, to act in a manner that results in damages to Tenant.

7.07 Damage to Tenant's Property

Notwithstanding the provisions of Section 7.06 to the contrary, except to the extent due to the gross negligence or willful misconduct of Landlord, Landlord, its agents, employees and/or contractors shall not be liable for (i) any damage to property entrusted to employees or security officers of the Project, Building or the Property, (ii) loss or damage to any property by theft or otherwise, or (iii) any injury or damage to persons or property resulting from fire, explosion, falling substances or materials, steam, gas, electricity, water or rain which may leak from any part of the Building, the Common Areas, Project or the Property or from the pipes, appliances or plumbing work therein or from the roof, street, or subsurface or from any other place or resulting from dampness or any other cause, except to the extent Landlord receives consideration for such damage or injury from a third party. Neither Landlord nor its agents, employees or contractors shall be liable for interference with light. Tenant shall give prompt notice to Landlord and appropriate emergency response officials if Tenant is or becomes aware of fire or accidents in the Building, the Common Areas or any other portion of the Project or of defects therein in the fixtures or equipment.

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ARTICLE 8: REPAIRS AND MAINTENANCE

8.01 Landlord Repairs and Maintenance

Subject to Landlord's right to reimbursement from Tenant pursuant to Sections 6 and Section 8, to the extent applicable, Landlord shall at its expense maintain in good condition and repair the structural portions of the Building including without limitation the foundation, roof and membrane and shall maintain in good condition the exterior of the Building, utilities to their point of connection to the Premises and the Common Areas of the Project. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist and no action is taken to repair failure for ten (10) days after written notice of the need for such repairs or maintenance is given to Landlord by Tenant or a shorter reasonable time if such repair is of an urgent nature. There shall be no abatement of Rent and, except for the negligence or willful misconduct of Landlord or its employees, no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvement in or to any portion of the Premises or in or to fixtures, appurtenances and equipment therein; provided, that Landlord, its employees, agents and contractors use reasonable efforts not to unreasonably interfere with Tenant's business in exercise of Landlord's rights or obligations hereunder. Except as may otherwise be expressly set forth herein, Tenant affirms that (a) neither Landlord nor any agent, employee or officer of Landlord has made any representation regarding the condition of the Premises, the Building, the Common Areas or the Project, and (b) Landlord shall not be obligated to undertake any repair, alteration, remodel, improvement, painting or decorating.

8.02 Utilities and Services

Subject to reimbursement pursuant to Sections 8.03 hereof, to the extent applicable, Landlord shall furnish or cause to be furnished to the Premises lines for water, electricity, sewage and telephone. Tenant shall pay before delinquency, at its sole cost and expense, all charges for water, heat, electricity, power, telephone service, sewer service charges and other utilities or services charged or attributable to the Premises; provided, however, that if any such services or utilities shall be billed to Landlord and are not separately billed to the Premises, Tenant shall pay to Landlord as Additional Rent, an amount equal to that proportion of the total charges therefor which the Rentable Area of the Premises bears to the rentable area of leased area covered by such charges.

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8.03 Tenant Repairs and Maintenance

Except as otherwise set forth in Sections 8.01 and Section 8.02 above, Tenant shall, at Tenant's sole cost and expense, keep, maintain and, to the extent reasonably required, replace the entire Premises, including but not by way of limitation, all interior walls, doors, ceiling, fixtures, furnishings, drapes, specialty lamps, light bulbs used for lighting, starters and ballasts for lighting, subfloors, carpets and floor coverings, elevators and heating, ventilation, air conditioning, and other utility and mechanical systems except dehumidifiers within the Premises to the extent serving the Premises exclusively, in good repair and in a clean and safe condition; provided that Landlord shall have the right to perform such work on behalf of Tenant in which event Tenant shall reimburse Landlord for the cost thereof promptly upon demand therefor. Tenant shall have the right to make routine repairs that are reasonably necessary for the day-to-day operation of the project without requiring prior approval from Landlord. In addition, if any repair or maintenance is necessary or prudent under Sections 8.01 and Section 8.02 as a result of an act or omission of Tenant or its agents, employees or contractors, Tenant shall reimburse Landlord for the entire cost of any such repair or maintenance immediately upon written demand therefor. Upon expiration or earlier termination of the Term, Tenant shall surrender the Premises to Landlord in the same condition as when leased, reasonable wear and tear and damage by fire or other casualty not required to be repaired by Tenant pursuant to this Lease excepted. Notwithstanding the preceding, Landlord may elect to contract with an HVAC service provider for periodic filter changes and inspections of the HVAC equipment located in the Premises ("Periodic Inspections"). The cost of such Periodic Inspections are to be paid by Landlord. HVAC related costs necessary to maintain the HVAC system in top operating condition (repairs, replacements, coil cleaning, etc.) shall be the responsibility of Tenant. All costs due by Tenant to Landlord in this article shall be considered Additional Rent due within ten (10) days after receipt of billing.

8.04 Non-liability of Landlord

Notwithstanding anything to the contrary contained in Sections 8.01 and Section 8.02 above or elsewhere in this Lease, Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, nor shall the Rent herein reserved be abated or rebated by reason of (a) the interruption or curtailment of the use of the Premises as a result of the installation of any equipment in connection with the Building or Project; or (b) any failure to furnish or delay in furnishing any services required to be provided by Landlord, unless and to the extent such failure or delay is caused by accident or any condition created by Landlord's active negligence; or (c) the limitation, curtailment, rationing or restriction of the use of water or electricity, gas or any other form of energy or any other service or utility whatsoever serving the Premises or Project.

8.05 Inspection of Premises

Landlord may enter the Premises to complete construction undertaken by Landlord on the Premises, to inspect, clean, improve or repair the same, to inspect the performance by Tenant of the terms and conditions hereof, show the Premises to prospective purchasers, tenants and lenders and for all other purposes as Landlord shall reasonably deem necessary or appropriate; provided, that Landlord shall use reasonable efforts not to interfere with Tenant's business in exercise of Landlord's rights hereunder. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises and any other loss in, upon or about the Premises, arising from exercise by Landlord of its rights hereunder. 

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ARTICLE 9: FIXTURES, PERSONAL PROPERTY ALTERATIONS

9.01 Fixtures and Personal Property

Tenant, at Tenant's expense, may install any necessary trade fixtures, equipment and furniture in the Premises, provided that such items are installed and are removable without damage to the structure of the Premises, including, but not limited to, damage to drywall, doors, door frames and floors. Landlord reserves the right to approve or disapprove of any interior improvements, which are visible from outside the Premises. Such improvements must be submitted for Landlord's written approval prior to installation, or Landlord may remove or replace such items at Tenant's sole expense. Said trade fixtures, equipment, furniture, cabling and personal property shall remain Tenant's property and shall be maintained in good condition while on the Premises and removed by Tenant upon the expiration or earlier termination of the Lease. As a covenant which shall survive the expiration or earlier termination of the Lease by 30 days, Tenant shall repair, at Tenant's sole expense, or at Landlord's election, reimburse Landlord for the cost to repair all damage caused by the installation or removal of said trade fixtures, equipment, cabling, furniture, personal property or temporary improvements. All installations and fixtures shale become the property of Landlord after completion of installation by Tenant. If Tenant fails to remove any items required by Landlord prior to or upon the expiration or earlier termination of this Lease, Landlord, at its option and without liability to Tenant for loss thereof, may keep and use them or remove any or all of them and cause them to be stored or sold in accordance with applicable law, and Tenant shall, upon demand of Landlord, pay to Landlord as Additional Rent hereunder all costs and expenses incurred by Landlord in so storing and/or selling said items. In the event any such fixtures, equipment, and/or furniture of Tenant are sold by Landlord, the proceeds of such sale shall be applied, first, to all expenses of Landlord incurred in connection with storage and sale; second, to any amounts owed by Tenant to Landlord under this Lease or otherwise, and, third, the remainder, if any, shall be paid to Tenant.

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9.02 Alterations

Tenant shall not make or allow to be made any material alterations, additions or improvements to the Premises (defined as alterations, additions or improvements costing in excess of $5,000.00 individually or in the aggregate with respect to separate items relating to the same improvement or alteration, or alterations, additions or improvements which affect the structure or exterior of the Building or any building, mechanical, electrical or life safety system), either at the inception of the Lease or subsequently during the Term, without obtaining the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion with respect to any alteration, addition or improvement that (i) affects the structure or exterior of the Building or any building, mechanical, electrical or life safety systems or (ii) potentially causes the Premises or Building to fail to comply with Arizona State Marijuana rules and regulations pertaining to facilities producing or processing cannabis, but shall not be unreasonably withheld. Tenant shall deliver to Landlord the contractor's name, state license number, a certificate of liability insurance naming Landlord and Landlord's manager and lender(s) as an additional insured, as well as full and complete plans and specifications of all such alterations, additions or improvements, and any subsequent modifications or additions to such plans and specifications, and no proposed work shall be commenced or continued by Tenant until Landlord has received and given its written approval of each of the foregoing. Landlord shall either approve or disapprove any proposed alteration, addition or improvement within thirty (30) days following receipt of all of the foregoing items, and if Landlord fails to deliver notice of disapproval within 30 days following receipt of all the foregoing items, Landlord's consent is deemed granted. Landlord shall not expressly or implicitly covenant or warrant that any plans or specifications submitted by Tenant are accurate, safe or sufficient or that the same comply with any applicable laws, ordinances, building codes, or the like. Further, Tenant shall indemnify, protect, defend and hold Landlord and Landlord's agents, employees and contractors and the Building harmless for, from and against any loss, damage, liability, claims, cost or expense, including attorneys' fees and costs, incurred as a result of any defects in design, materials or workmanship resulting from Tenant's alterations, additions or improvements to the Premises. All alterations, telephone or telecommunications lines, cables, conduits and equipment and all other additions or improvements to the Premises made by Tenant shall remain the property of Tenant until termination of the Lease, at which time they shall, unless otherwise elected by Landlord by written notice to Tenant, be and become the property of Landlord. Landlord may, as a condition to approval of any such alterations, additions or improvements, require Tenant to remove any partitions, counters, railings, telephone and telecommunications lines, cables, conduits and equipment and/or other improvements installed by Tenant during the Term, and Tenant shall repair all damage resulting from such removal or shall pay to Landlord all costs arising from such removal if Landlord shall demand the removal of such alterations, additions and improvements prior to lease expiration or earlier termination of the Lease and Tenant fails to remove and repair the Premises prior to Tenant’s vacation thereof. All repairs, alterations, additions and restorations by Tenant hereinafter required or permitted shall be done in a good and workmanlike manner and in compliance with the plans and specifications approved by Landlord and in compliance with all applicable laws and ordinances, building codes, bylaws, regulations and orders of any federal, state, county, municipal or other public authority and of the insurers of the Premises and as-built plans and specifications shall be provided to Landlord by Tenant upon completion of the work. If required by Landlord, Tenant shall secure at Tenant's own cost and expense a completion and lien indemnity bond or other adequate security, in form and substance reasonably satisfactory to Landlord. Tenant shall reimburse Landlord for Landlord's reasonable charges (including any professional fees incurred by Landlord and a reasonable administrative fee as established by Landlord from time to time) for reviewing and approving or disapproving plans and specifications for any proposed alterations.

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9.03 Liens

Tenant shall promptly file and/or record, as applicable, all notices of completion provided for by law, and shall pay and discharge all claims for work or labor done, supplies furnished or services rendered at the request of Tenant or at the request of Landlord on behalf of Tenant, and shall keep the Premises, the Property and the Project free and clear of all contractor’s, mechanics', materialmen's and worker’s liens in connection therewith. Landlord shall have the right, and shall be given ten (10) business days written notice by Tenant prior to commencement of the work, to post or keep posted on the Premises, or in the immediate vicinity thereof, any notices of non-responsibility for any construction, alteration, or repair of the Premises by Tenant. If any such lien or notice preceding the filing of any lien is filed, Tenant shall cause same to be discharged of record within ten (10) days thereof, or if Tenant disputes the correctness or validity of any claim of lien, Landlord may, in its reasonable discretion, permit Tenant to post or provide security in a form and amount acceptable to Landlord to insure that title to the Building and the Project remains free from any such actual or potential encumbrance. If said lien or potential encumbrance is not timely discharged by Tenant as aforesaid, Landlord may, but shall not be required to, take such action or pay such amount as may be necessary to remove such lien and Tenant shall pay to Landlord as Additional Rent any such amounts expended by Landlord, together with interest thereon at the Default Rate of 12% within five (5) days after notice is received from Landlord of the amount expended by Landlord. 

ARTICLE 10: USE AND CONFLUENCE WITH APPLICABLE LAW

10.01 Premises Use and Confluence with Applicable Law

State and Federal Law Confluence. Tenant shall only use the Premises for the purposes described in Section 1.01 above, and uses customarily incidental thereto, and for no other use without the prior written consent of Landlord. Tenant shall, at Tenant's sole cost and expense, comply with applicable requirements of municipal, county, state and, except as to certain applicable federal law, other applicable governmental authorities now or hereafter in force pertaining to Tenant's business operations, alterations and/or specific use of the Premises, the Building and/or the Project, and shall secure any necessary permits therefore and shall faithfully observe in the use of the Premises, Building and the Project, applicable municipal, county, state and, except as to certain applicable federal law, other applicable governmental entities' requirements which are now or which may hereafter be in force. In connection with the immediately preceding sentence, Tenant and Landlord acknowledge their belief that the Lease of the Premises for the intended use relates to activities that they have been advised are lawful under the laws of the State of Arizona, yet perhaps not lawful under the laws of the United States. The parties acknowledge that both are benefited by the exchanged considerations under this Lease and owing to their mutual understanding that the intended Premises use is lawful under the laws of the State of Arizona, hereby agree that present status of federal law rendering the intended use of the Premises as unlawful shall not serve as a basis for Tenant to claim a breach of the terms hereof for any reason.

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10.02 Hazardous Materials

(a) Defined terms. "Hazardous Materials" means, among other things, any of the following, in any amount: (a) any petroleum or petroleum derived or derivative product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls and medical wastes; (b) any radioactive substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals, materials or substances, whether solid, liquid or gas, defined as or included in the definitions of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," ''toxic substances," "toxic pollutants," "solid waste," or words of similar import in any federal, state or local statute, law, ordinance or regulation or court decisions now existing or hereafter existing as the same may be interpreted by government offices and agencies. "Hazardous Materials Laws" means any federal, state or local statutes, laws, ordinances or regulations or court decisions now existing or hereafter existing that control, classify, regulate, list or define Hazardous Materials or require remediation of Hazardous Materials contamination.

(b) Compliance with Hazardous Materials Laws. Tenant will not cause any Hazardous Material to be brought upon, kept, generated or used on the Project in a manner or for a purpose prohibited by or that could result in liability under any Hazardous Materials Law; provided, however, in no event shall Tenant allow any Hazardous Material to be brought upon, kept, generated or used in the Premises or on the Project other than those Hazardous Materials for which Tenant has received Landlord's prior written consent to bring on (other than small quantities of cleaning or other/industrial supplies as are customarily used by a Tenant in the ordinary course of business in a general industrial business park facility). Tenant, at its sole cost and expense, will comply with (and obtain all permits required under) all Hazardous Materials Laws, groundwater wellhead protection laws, storm water management laws, fire protection provisions, and prudent industry practice relating to the presence, storage, transportation, disposal, release or management of Hazardous Materials in, on, under or about the Premises or the Project that Tenant brings upon, keeps, generates or uses in the Premises or on the Project (including, without limitation, but subject to this Section 10.02, immediate remediation of any Hazardous Materials in, on, under or about the Project that Tenant brings upon, keeps, generates or uses on the Project in compliance with Hazardous Materials Laws) and in no event shall Tenant allow any liens or encumbrances pertaining to Tenant's use of Hazardous Materials to attach to any portion of the Project. On or before the expiration or earlier termination of this Lease, Tenant, at its sole cost and expense, will completely remove from the Premises or, as applicable, the Project (regardless whether any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials Laws, all Hazardous Materials Tenant causes to be present in, on, under or about the Premises or the Project. Tenant will not take any remedial action in response to the presence of any Hazardous Materials in on, under or about the Premises or the Project, nor enter into (or commence negotiations with respect to) any settlement agreement, consent decree or other compromise with respect to any claims relating to or in any way connected with Hazardous Materials in, on, under or about the Premises or the Project, without first notifying Landlord of Tenant's intention to do so and affording Landlord reasonable opportunity to investigate, appear, intervene and otherwise assert and protect Landlord's interest in the Premises and/or the Project. Landlord shall have the right from time to time to inspect the Premises to determine if Tenant is in compliance with this Section 10.02.

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(c) Notice of Actions. Tenant will notify Landlord of any of the following actions affecting Landlord, Tenant or the Premises or the Project that result from or in any way relate to Tenant's use of the Premises or the Project immediately after receiving notice of the same: (i) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened under any Hazardous Materials Law; (ii) any claim made or threatened by any person relating to damage, contribution, liability, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Material; and (iii) any reports made by any person, including Tenant, to any environmental agency relating to any Hazardous Material, including any complaints, notices, warnings or asserted violations. Tenant will also deliver to Landlord, as promptly as possible and in any event within five (5) business days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises or the Project or Tenant's use of the Premises or the Project. Upon Landlord's written request, Tenant will promptly deliver to Landlord documentation acceptable to Landlord reflecting the legal and proper disposal of all Hazardous Materials removed or to be removed from the Premises. All such documentation will list Tenant or its agent as a responsible party and the generator of such Hazardous Materials and will not attribute responsibility for any such Hazardous Materials to Landlord or Landlord's property manager.

(d) Disclosure and Warning Obligations. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous Materials Laws resulting from or in any way relating to Tenant's use of the Premises or Project are Tenant's sole responsibility, regardless whether the Hazardous Materials Laws permit or require Landlord to report or warn.

(e) Indemnification. Tenant releases and will indemnify, defend (with counsel reasonably acceptable to Landlord), protect and hold harmless the Landlord and Landlord's agents, employees and contractors for, from and against any and all claims, liabilities, damages, losses, costs and expenses whatsoever arising or resulting, in whole or in part, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under, upon or from the Premises or the Project (including water tables and atmosphere) that Tenant brings upon, keeps, generates or uses on the Premises or the Project. Tenant's obligations under this Section include, without limitation and whether foreseeable or unforeseeable, (i) the costs of any required or necessary repair, cleanup, detoxification or decontamination of the Premises or the Project; (ii) the costs of implementing any closure, remediation or other required action in connection therewith as stated above; (iii) the value of any loss of use and any diminution in value of the Premises or the Project, and (iv) consultants' fees, experts' fees and response costs. The Tenant's obligations under this section survive the expiration or earlier termination of this Lease.

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(f) Hazardous Materials Representation by Landlord. Landlord represents to Tenant that, to its actual knowledge and except as Landlord has previously disclosed to Tenant, Landlord has not caused the generation, storage or release of Hazardous Materials upon the Premises, except in accordance with Hazardous Materials Laws and prudent industry practices regarding construction of the Premises.

(g) Environmental Site Assessments. Upon request by Landlord during the Term of this Lease, prior to the exercise of any renewal Term and/or prior to vacating the Premises, Tenant will obtain and submit to Landlord an environmental site assessment from an environmental consulting company reasonably acceptable to Landlord.

10.03 Signs

The Tenant shall not paint, display, inscribe, place or affix any sign, picture, advertisement, notice, lettering, or direction on any part of the outside of the Building or the Project or visible from the outside of the Premises, the Building or the Project, except as first approved by Landlord in writing or as may be set forth in the Outline Plans and Specifications. All signage shall comply with the Project sign criteria as adopted and promulgated by Landlord from time to time.

ARTICLE 11: DAMAGE AND DESTRUCTION

11.01 Reconstruction

If the Building is damaged or destroyed during the Term other than by reason of the negligence or act of Tenant, Landlord shall, except as hereinafter provided, diligently repair or rebuild it to substantially the condition in which it existed immediately prior to such damage or destruction. If Landlord is obligated or elects to repair or restore as herein provided, Landlord shall be obligated to make repair or restoration of only those portions of the Premises which were initially provided at Landlord's expense or as part of the original installation by Landlord for Tenant and the repair and/or restoration of other items within the Premises shall be the obligation of the Tenant.

11.02 Excessive Damage or Destruction

If the Building or the Premises is damaged or destroyed by reason arising other than through the neglect or act of Tenant to the extent that it cannot within Landlord's reasonable discretion, with reasonable diligence, be fully repaired or restored by Landlord within the earlier of (i) one hundred twenty (120) days after the date of the damage or destruction, or (ii) the expiration of the Term hereof, Landlord may terminate this Lease by written notice to Tenant within thirty (30) days of the date of the damage or destruction. If Landlord does not terminate the Lease, this Lease shall remain in full force and effect and Landlord shall diligently repair and restore the damage as soon as reasonably possible.

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11.03 Uninsured Casualty

Notwithstanding anything contained herein to the contrary, in the event of damage to or destruction of all or any portion of the Building, which damage or destruction is not fully covered by the insurance proceeds received by Landlord under the insurance policies described in Article 7 hereinabove, Landlord may terminate this Lease by written notice to Tenant given within sixty (60) days after the date of notice to the Landlord that said damage or destruction is not so covered. If Landlord does not elect to terminate this Lease, the Lease shall remain in full force and effect and the Building shall be repaired and rebuilt in accordance with the provisions for repair set forth in Section 11.01 hereinabove.

11.04 Waiver

With respect to any damage or destruction which Landlord is obligated to repair or may elect to repair under the terms of this Article 11, and to the extent permitted by law, Tenant hereby waives any rights to terminate this Lease pursuant to rights otherwise accorded by law to tenants, except as expressly otherwise provided herein.

11.05 Mortgagee's Right

Notwithstanding anything herein to the contrary, if the holder of any indebtedness secured by a mortgage or deed of trust covering the Property, the Building and/or the Project requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirement is made. Upon any termination of this Lease under the provisions hereof, the parties shall be released without further obligation to the other from date possession of the Premises is surrendered to Landlord, except for items which are theretofore accrued and are then unpaid.

11.06 Damage Near End of Term

Notwithstanding anything to the contrary contained in this Article 11, in the event the Premises or the Building are subject to excessive damage (as defined in Section 11.03 during the last twenty-four (24) months of the Term or any applicable extension periods, Landlord may elect to terminate this Lease by written notice to Tenant within thirty (30) days after the date of such damage. 

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ARTICLE 12: EMINENT DOMAIN

12.01 Condemnation & Eminent Domain

In the event the whole of the Premises, Building, Project and/or Common Areas, as the case may be, and/or such part thereof as shall substantially interfere with Tenant's use and occupation thereof, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or is sold in lieu of or to prevent such taking, then Tenant shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority. In the event the whole of the Premises, Building, Project and/or Common Areas, as the case may be, or such part thereof as shall substantially interfere with Landlord's use and occupation thereof, or if any access points to adjoining streets, shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or is sold in lieu of or to prevent such taking, then Landlord shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority. Except as provided below, Tenant shall not assert any claim against Landlord or the taking authority for any compensation because of such taking, and Landlord shall be entitled to receive the entire amount of any award without deduction for any estate or interest of Tenant in the Premises. Nothing contained in this Article 12 shall be deemed to give Landlord any interest in any separate award made to Tenant for the taking of personal property and fixtures belonging to Tenant or for Tenant's moving expenses. In the event the amount of property or the type of estate taken shall not substantially interfere with the conduct of Tenant's business, Landlord shall be entitled to the entire amount of the award without deduction for any estate or interest of Tenant, Landlord shall promptly proceed to restore the Building to substantially their same condition prior to such partial taking less the portion thereof lost in such condemnation, and the Base Rent shall be proportionately reduced by the time during which, and the portion of the Premises which, Tenant shall have been deprived of possession on account of said taking and restoration. 

ARTICLE 13: DEFAULT

13.01 Events of Default

The occurrence of any of the following events shall constitute an "Event of Default" on the part of the Tenant with or without notice from Landlord:

(a) Tenant shall fail to pay on or before the due date any installment of Rent or other payment required pursuant to this Lease;

(b) Tenant shall abandon the Premises, whether or not Tenant is in default of the Rent payments due under this Lease;

(c) Tenant shall fail to comply with any Term, provision, or covenant of this Lease, and such failure is not cured within ten (10) days after written notice thereof to Tenant (said notice being in lieu of, and not in addition to, any notice required as a prerequisite to a forcible entry and detainer or similar action for possession of the Premises); provided that if the nature of such cure is such that a longer cure period is necessary, Tenant shall only be in default if Tenant shall have failed to commence such cure within said ten (10) day period and thereafter to have diligently prosecuted such cure to completion;

(d) Tenant shall file a petition or be adjudged a debtor or bankrupt or insolvent under the United States Bankruptcy Code, as amended, or any similar law or statute of the United States or any State; or a receiver or trustee shall be appointed for all or substantially all of the assets of Tenant and such appointment or petition, if involuntary, is not dismissed within sixty (60) days of filing; or

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(e) Tenant shall make an assignment for the benefit of creditors.

(f) Tenant does not fully comply with the terms listed in the “LICENSED MARIJUANA COMPLIANCE AGREEMENT,” which will be considered an incurable default.

13.02 Remedies

(a) Upon the occurrence of any Event of Default set forth in this Lease, in addition to any other remedies available to Landlord at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder, in the event that Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant: (i) any unpaid Rent which has been earned at the time of such termination plus interest at the rates contemplated by this Lease; plus (ii) 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 Tenant proves could have been reasonably avoided plus interest at the rates contemplated by this Lease; plus (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 Tenant proves could be reasonably avoided; plus (iv) the unamortized balance of the value of any free rent, tenant improvement costs, commissions and any other monetary concessions provided to Tenant pursuant to this Lease, as amortized over the initial Term of this Lease; plus (v) any other amount necessary to compensate Landlord for all the damage proximately caused by Tenant's failure to perform Tenant's obligation under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, costs to restore the Premises to good condition, costs to remodel, renovate or otherwise prepare the Premises, or portions thereof, for a new tenant, leasing commissions, marketing expenses, reasonable attorneys' fees, and free rent, moving allowances and other types of leasing concessions. As used in Subsections 13.02(a) (iii) above, the "worth at the time of award" is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(b) In the event of any such default by Tenant, Landlord shall also have the right with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises if the tenant fails to comply within the ten day period described above; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of the Tenant No re-entry or taking possession of the Premises by Landlord pursuant to this Section 13.02(b) shall be construed as an acceptance of a surrender of the Premises or an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.

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(c) In the event of the vacation or abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter as provided above or shall take possession of the Premises pursuant to legal proceedings or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease as provided above, Landlord may from time to time, without terminating this Lease, either recover all Rent as it becomes due or re-let the Premises or any part thereof for the Term of this Lease on terms and conditions as Landlord at its sole discretion may deem advisable with the right to make alterations and repairs to the Premises.

(d) In the event that Landlord shall elect to so re-let, the rents received by Landlord from such relating shall be applied: first to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord second to the payment of any costs of such re-letting; third, to the payment of the cost of any alterations and repairs to the Premises; fourth, to the payment of Rent due and unpaid hereunder; and the residual, if any, shall be held by Landlord and applied to payment of future Rent as the same shall become due and payable hereunder. Should that portion of such rents received from such re-letting during the month, which is applied to the payment of Rent, be less than the Rent payable during that month by Tenant hereunder, then Tenant shall pay any such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as is certain, any of the costs and expenses incurred by Landlord in such re-letting or in making such alterations and repairs not covered by the rents received from such re-letting.

(e) All rights, options and remedies of Landlord contained in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. No waiver of any default of Tenant hereunder shall be implied from any acceptance by Landlord of any Rent or other payments due hereunder or any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver. The consent or approval of Landlord to or of any act by Tenant requiring Landlord's consent or approval shall not be deemed to waive or render unnecessary Landlord's consent or approval to or of any subsequent similar acts by Tenant.

(f) In the event that during any twelve month period of this Lease, Tenant commits more than two (2) acts or omissions of default for which default notices are given by Landlord pursuant to this Article 13 (whether or not such defaults are cured by Tenant), Landlord may, at its option, elect to terminate this Lease. Landlord's election to exercise its early termination rights shall be effective only upon written notice delivered to Tenant specifying Landlord's election to cause an early termination of this Lease. Such early termination shall be in effect when such written notice is provided to Tenant. Landlord's right of early termination shall be in addition to all other rights and remedies available to Landlord at law or in equity, however, if Landlord makes this election in spite of Tenant having cured every breach within the described period, Landlord shall have no right to collect any additional future rent.

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13.03 Landlord's Default

Landlord shall not be in default unless Landlord fails to perform its obligations under this Lease within thirty (30) days after written notice by Tenant, or if such failure is not reasonably capable of being cured within such thirty (30) day period, Landlord shall not be in default unless Landlord has failed to commence the cure and diligently pursue the cure to completion. In no event shall Landlord be liable to Tenant or any person claiming through or under Tenant for consequential, exemplary or punitive damages. 

ARTICLE 14: FILING OF PETITION

14.01 Tenant's Bankruptcy

Landlord and Tenant (as either debtor or debtor-in-possession) agree that if a petition ("Petition") is filed by or against Tenant under any Chapter of Title 11 of the United States Code (the "Bankruptcy Code"), the following provisions shall apply:

(a) Adequate protection for Tenant's obligations accruing after filing of the Petition and before this Lease is rejected or assumed shall be provided within 15 days after filing in the form of a security deposit equal to three months' Base Rent and Additional Rent and other Lease charges, to be held by the court or an escrow agent approved by Landlord and the court.

(b) The sum of all amounts payable by Tenant to Landlord under this Lease constitutes reasonable compensation for the occupancy of the Premises by Tenant.

(c) Tenant or Trustee shall give Landlord at least 30 days written notice of any abandonment of the Premises or any proceeding relating to administrative claims. If Tenant abandons without notice, Tenant or Trustee shall stipulate to entry of an order for relief from stay to permit Landlord to reenter and re-let the Premises.

(d) If Tenant failed to timely and fully perform any of its obligations under this Lease before the filing of the Petition, whether or not Landlord has given Tenant written notice of that failure and whether or not any time period for cure expired before the filing of the Petition, Tenant shall be deemed to have been in default on the date the Petition was filed for all purposes under the Bankruptcy Code.

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(e) For the purposes of Section 365(b)(1) of the Bankruptcy Code, prompt cure of defaults shall mean cure within 30 days after assumption.

(f) For the purposes of Section 365(b)(1) and 365(f)(2) of the Bankruptcy Code, adequate assurance of future performance of this Lease by Tenant, Trustee or any proposed assignee will require that Tenant, Trustee or the proposed assignee deposit three months of Base Rent and Additional Rent into an escrow fund (to be held by the court or an escrow agent approved by Landlord and the court) as security for such future performance. In addition, if this Lease is to be assigned, adequate assurance of future performance by the proposed assignee shall require that: (i) the assignee have a tangible net worth not less than the net worth of Tenant as of the Commencement Date or that such assignee's performance be unconditionally guaranteed by a person or entity that has a tangible net worth not less than the net worth of Tenant as of the Commencement Date; (ii) the assignee demonstrate that it possesses a history of success in operating a business of similar size and complexity in a similar market as Tenant's business; and (iii) assignee assume in writing all of Tenant's obligations relating to the Premises or this Lease.

(g) If Tenant or Trustee intends to assume and/or assign this Lease, Tenant or Trustee shall provide Landlord with 30 days written notice of the proposed action, separate from and in addition to any notice provided to all creditors. Notice of a proposed assumption shall state the assurance of prompt cure, compensation for loss and assurance of future performance to be provided to Landlord. Notice of a proposed assignment shall state: (i) the name, address, and federal tax identification and registration numbers of the proposed assignee; (ii) all of the terms and conditions of the proposed assignment, and (iii) the assignee's proposed adequate assurance of future performance to be provided to Landlord.

(h) If Tenant is in default under this Lease when the Petition is filed, Landlord shall not be required to provide Tenant or Trustee with services or supplies under this Lease or otherwise before Tenant assumes this Lease, unless Tenant compensates Landlord for such services and supplies in advance.

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ARTICLE 15: ASSIGNMENT AND SUBLETTING

15.01 Prohibition

Tenant shall not assign, mortgage, pledge or otherwise transfer or encumber this Lease, in whole or in part, nor sublet, assign, or permit occupancy by any party other than Tenant of all or any part of the Premises, without the prior written consent of Landlord, which may not be unreasonably withheld. Tenant shall at the time the Tenant requests the consent of Landlord, deliver to Landlord such information in writing as Landlord may reasonably require respecting the proposed assignee or subtenant including, without limitation, the name, address, nature of business, ownership, financial responsibility and standing of such proposed assignee or subtenant and Landlord shall have not less than twenty (20) business days after receipt of all required information to elect one of the following: (a) consent to such proposed assignment, encumbrance or sublease, or (b) refuse such consent. In addition, as a condition to Landlord's consent to any assignment, sublease or encumbrance of this Lease shall be the delivery to Landlord of a true copy of the fully executed instrument of assignment, transfer or encumbrance and an agreement executed by the assignee, sublessee or other transferee in form and substance satisfactory to Landlord and expressly enforceable by Landlord, whereby the assignee assumes and agrees to be bound by the terms and provisions of this Lease and perform all the obligations of Tenant hereunder with respect to the assigned or subleased portion of the Premises. No assignment or subletting by Tenant shall relieve Tenant or Guarantor of any obligation under this Lease, including Tenant’s obligation to pay Base Rent and Additional Rent hereunder. Any purported assignment or subletting contrary to the provisions hereof without consent shall be void. The consent by Landlord to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment of subletting. Tenant's sole remedy for Landlord's refusal to consent to a proposed assignee or sublessee of Tenant will be an action or proceeding for specific performance, injunction or declaratory relief. Tenant shall pay Landlord's reasonable processing costs and attorneys' fees incurred in reviewing any proposed assignment or sublease.

15.02 Excess Rental

If pursuant to any assignment or sublease, Tenant receives rent, either initially or over the Term of the assignment or sublease, in excess of the Rent called for hereunder, or in the case of this sublease of a portion of the Premises in excess of such Rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are appropriately taken into account, Tenant shall pay to Landlord, as Additional Rent hereunder, fifty percent (50%) of the excess of each such payment of rent received by Tenant after its receipt.

15.03 Scope

The prohibition against assigning or subletting contained in this Article 15 shall be construed to include a prohibition against any assignment or subletting by operation of law. If this Lease be assigned, or if the underlying beneficial interest of Tenant is transferred, or if the Premises or any part thereof be sublet or occupied by anybody other than Tenant, Landlord may collect Rent from the assignee, subtenant or occupant and apply the net amount collected to the Rent herein reserved and apportion any excess Rent so collected in accordance with the terms of the immediately preceding paragraph, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. No assignment or subletting shall affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee), and Tenant shall not be released from performing any of the terms, covenants and conditions of this Lease. 

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15.04 Waiver

Notwithstanding any assignment or sublease, or any indulgences, waivers or extensions of time granted by Landlord to any assignee or sublessee or failure of Landlord to take action against any assignee or sublease, Tenant hereby agrees that Landlord may, at its option, and upon not less than ten (10) days' notice to Tenant, proceed against Tenant without having taken action against or joined such assignee or sublessee, except that Tenant shall have the benefit of any indulgences, waivers and extensions of time granted to any such assignee or sublessee.

15.05 Change in Control

Tenant is a limited liability company, a withdrawal of or change in general partners or members, in one or more transfers, owning more than a fifty one percent (51%) interest and less than a one hundred percent interest (100%) in the LLC to a single party and/or its affiliates, shall constitute a voluntary assignment and shall be subject to the provisions of this Article 15. If the Tenant is a corporation, a transfer of fifty one percent (51%) or more and less than one hundred percent (100%) of the corporation's stock or assets in one or more transfers to a single party and/or its affiliates, or a change in the control of such company pursuant to a merger, consolidation, sale of assets or otherwise of more than fifty one percent and less than one hundred percent to a single party and/or its affiliates, shall be deemed for the purposes hereof to be an assignment of this Lease, and shall be subject to the provisions of this Article 15.

ARTICLE 16: ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION

16.01 Estoppel Certificate

Within ten (10) business days after request therefor by Landlord, or if on any sale, assignment or hypothecation by Landlord of Landlord's interest in the Property, the Project and/or the Premises, or any part thereof, an estoppel certificate shall be required from Tenant, Tenant shall deliver to the requesting party a statement in writing: (a) certifying that the Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying that the Lease, as so modified, is in full force and effect; (b) certifying the dates to which the Rent and other charges are paid in advance, if any; and (c) acknowledging that there are not, to such party's knowledge, any uncured defaults on the part of the requesting party hereunder, or specifying such defaults if they are claimed. Any such statement may be relied upon by any prospective purchaser or lender of all or any portion of the Premises or any leasehold interest therein. The failure to deliver such statement within such time shall, at Landlord’s option be an Event of Default hereunder and shall be conclusive and binding upon the party upon whom the request is made 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 on the requesting party's performance; and (iii) no Rent has been paid in advance. If Tenant is required or requested to execute more than one estoppel certificate or similar document in any twelve (12) month period, Landlord shall reimburse Tenant for its legal fees incurred in having such documents reviewed, up to a total charge of five hundred dollars ($500.00). 

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16.02 Attornment

Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any mortgage or deed of trust made by Landlord, its successors or assigns, encumbering the Premises or the Building, or any part thereof or in the event of termination of a ground lease, if any, and if so requested, attorn to the purchaser upon such foreclosure or sale or upon any grant of a deed in lieu of foreclosure and recognize such purchaser as Landlord under this Lease; provided, that such purchaser recognizes Tenant's rights under this Lease and agrees not to disturb Tenant's quiet possession of the Premises for so long as Tenant is not in default hereunder.

16.03 Subordination

The rights of Tenant hereunder are and shall be, at the election of any mortgagee or the beneficiary of a deed of trust encumbering the Project (or the portion thereof on which the Building is located) and/or Building, subject and subordinate to the lien of such mortgage or deed of trust, or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the Project (or the portion thereof on which the Building is located) and/or the Building, and to all advances made or hereafter to be made upon the security thereof. If requested, Tenant agrees to execute such documentation as may be required by Landlord or its lender to further effect the provisions of this Article 16 in such form as reasonably requested by Landlord or its Lender.

16.04 Recording

Tenant covenants and agrees with Landlord that Tenant shall not record this Lease or any memorandum thereof without Landlord's prior written consent. Notwithstanding the provisions of Section 16.04, in the event that Landlord or its lender requires this Lease or a memorandum thereof to be recorded in priority to any mortgage, deed of trust or other encumbrance which may now or at any time hereafter affect in whole or in part the Building, the Project (or the portion thereof on which the Building is located), and whether or not any such mortgage, deed of trust or other encumbrance shall affect only the Building, the Project (or the portion thereof on which the Building is located), or shall be a blanket mortgage, deed of trust or encumbrance affecting other premises as well, the Tenant covenants and agrees with Landlord that the Tenant shall execute promptly upon request from Landlord any certificate, priority agreement or other instrument which may from time to time be requested to give effect thereto.

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ARTICLE 17: MISCELLANEOUS

17.01 Notices

Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Landlord at the address provided in Section 1.01. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Tenant at the address provided in Section 1.01, or to such other address as Tenant or Landlord may designate by written notice to the other. Notices shall be deemed sufficiently served upon the earlier of actual receipt or the expiration of three (3) days after the date of mailing thereof, or if a party can conclusively show that actual receipt occurred by others means such as an email that was replied to with the original email text retained or by other method that conclusively demonstrates actual receipt, then notice shall be deemed properly delivered.

17.02 Successors Bound

This Lease and each of its covenants and conditions shall be binding upon and shall inure to the benefit of the parties hereto and their respective assignees, subject to the provisions hereof. Whenever in this Lease a reference is made to Landlord, such reference shall be deemed to refer to the person in whom the interest of Landlord shall be vested, and Landlord shall have no obligation hereunder as to any claim arising after the transfer of its interest in the Building. Any successor or assignee of the Tenant who accepts an assignment of the benefit of this Lease and enters into possession or enjoyment hereunder shall thereby assume and agree to perform and be bound by the covenants and conditions thereof. Nothing herein contained shall be deemed in any manner to give a right of assignment without the prior written consent of Landlord pursuant to, or otherwise as provided in, Article 15 hereof.

17.03 Waiver

No waiver of any default or breach of any covenant by either party hereunder shall be implied from any omission by either party to take action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the waiver and said waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant, term or condition contained herein by either party shall not be construed as a waiver of any subsequent breach of the same covenant, term or condition. The consent or approval by either party to or of any act by either party requiring further consent or approval shall not be deemed to waive or render unnecessary their consent or approval to or of any subsequent similar acts.

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17.04 Subdivision and Easements

Landlord reserves the right to: (a) subdivide the Project; (b) alter the boundaries of the Project; and (c) grant easements on the Project and dedicate for public use portions thereof; provided, however, that no such grant or dedication shall materially interfere with Tenant's use of the Premises. Tenant hereby consents to such subdivision, boundary revision, and/or grant or dedication of easements and agrees from time to time, at Landlord's request, to execute, acknowledge and deliver to Landlord, in accordance with Landlord's instructions, any and all documents, instruments, maps or plats necessary to effectuate Tenant's consent thereto.

17.05 Landlord's Reserved Rights in Common Areas

Landlord reserves the right from time to time, provided that Tenant's use and enjoyment of the Premises is not materially and adversely affected thereby, to: (a) install, use, maintain, repair and replace pipes, ducts, conduits, wires and appurtenant meters and equipment for service to the Premises or other parts of the Building above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas, and to relocate any pipes, ducts, conduit, wires and appurtenant meters in the Building which are located or located elsewhere outside the Building; (b) make changes to the Common Areas and/or the parking facilities located thereon, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways; (c) close temporarily all or any portion of the Common Areas and/or the Building in order to perform any of the foregoing or any of Landlord's obligations under this Lease, so long as reasonable access to the Building remains available during normal business hours; and (d) alter, relocate or expand, and/or to add additional structures and improvements to, or remove same from, all or any portion of the Common Areas or other portions of the Project.

17.06 Accord and Satisfaction

No payment by Tenant or receipt by Landlord of a lesser amount than the Rent herein stipulated shall be deemed to be other than on account of the Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or pursue any other remedy provided in this Lease unless agreed upon in writing or electronic writing between the parties.

17.07 Limitation of Landlord's and Tenant's personal liabilities

The obligations of Landlord and Tenant under this Lease do not constitute personal obligations of the individual partners, directors, officers, members, employees or shareholders of each respective party or their partners, and each party shall look solely to the named entities on this lease, and the rents and profits therefrom, for satisfaction of any liability in respect to this Lease and will not seek recourse against the individual partners, directors, officers, members, employees or shareholders of either party, or their partners or any of their personal assets for such satisfaction unless otherwise expressly provided or committed to by either party. Nothing herein shall abrogate the rights of any party to pursue any other party for a tort action committed that party him or herself.

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17.08 Survival

The obligations and liabilities of each party which are incurred or accrue prior to the expiration of this Lease or the termination of this Lease or of Tenant's right of possession shall survive such expiration or termination, as shall all provisions by which a party is to provide defense and indemnity to the other party, all provisions waiving or limiting the liability of Landlord, and all attorneys' fees provisions.

17.09 Attorneys' Fees

In the event either party requires the services of an attorney in connection with enforcing the terms of this Lease or in the event suit is brought for the recovery of any Rent due under this Lease or the breach of any covenant or condition of this Lease, or for the restitution of the Premises to Landlord and/or eviction of Tenant during the Term of this Lease, or after the expiration thereof, the substantially prevailing party will be entitled to a reasonable sum for attorneys' fees, witness fees and other court costs, both at trial and on appeal.

17.10 Captions and Article Numbers

The captions, article, paragraph and Section numbers and table of contents appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent or such Sections or articles of this Lease nor in any way affect this Lease.

17.11 Severability

If any Term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, shall to any extent be held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Lease, or the application thereof to any person or circumstance, shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

17.12 Governing Law, Dispute Resolution and Venue

This Lease shall be construed in accordance with the laws of the State of Arizona. In the event of any dispute, venue shall be the state court located in Arizona.

In the event a party is in breach of this Agreement and the failure of a party to cure said breach in a timely manner, pursuant to this Agreement, to the other party’s satisfaction within the period set forth herein, the other party or parties, in addition to and not in limitation of any other rights and remedies available to such other party or parties at law or in equity, shall have the right to seek injunctive relief and/or the appointment of a receiver. 

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The forgoing notwithstanding, the parties hereby agree to attempt to resolve all differences among themselves by non-binding mediation. In the event of a dispute, either party may demand mediation (a settlement conference). If the parties fail to agree upon a mediator within five (5) business days of demand for mediation, either party may petition the Maricopa County Superior Court in Arizona for the appointment of a mediator. If the dispute is not resolved by agreement of all parties within thirty (30) calendar days of the appointment of a mediator, or within forty-five (45) days after the written request for mediation is transmitted to the other party, either party may commence arbitration. The parties shall split the mediator’s fee.

If mediation is not timely commenced or fails, all disputes among the parties to this Agreement shall be settled by binding arbitration, by one arbitrator, according to the Arizona Revised Statutes and the Arizona Rules of Civil Procedure. If the parties cannot unanimously agree upon an arbitrator, any person or entity involved in the dispute may petition the Maricopa County Superior Court for the appointment of an arbitrator. The parties to the arbitration shall split the arbitrator’s fees equally. The arbitrator’s decision shall be final and binding and may be enforced according to the Uniform Arbitration Act and/or enforced in any court of competent jurisdiction. The arbitrator may award injunctive relief and may award attorney fees and/or costs to the prevailing party or parties.

17.13 Submission of Lease

The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of or option for leasing the Premises. This document shall become effective and binding only upon execution and delivery hereof by Landlord and Tenant. No act or omission of any officer, employee or agent of Landlord or Tenant shall alter, change or modify any of the provisions hereof.

17.14 Holding Over

Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration or earlier termination of this Lease without Landlord's prior written consent, such holding over shall constitute and be construed as tenancy at sufferance only, at a monthly rent equal to two hundred percent (200%) of the Base Rent payable for the final month of the Term of this Lease and otherwise upon the terms and conditions in the Lease, so far as applicable. Should Tenant, or any of its successors in interest, hold over the Premises or any part thereof after the expiration or earlier termination of this Lease with Landlord's prior written consent, such holding over shall constitute and be construed as a tenancy from month to month only, at a fair market monthly rent as agreed by Landlord and Tenant and otherwise upon the terms and conditions of this Lease, so far as applicable. The acceptance by Landlord of Rent after such expiration or early termination shall not result in a renewal or extension of this Lease. The foregoing provisions of this Section 17.14 are in addition to and do not affect Landlord's right of re-entry or any other rights of Landlord hereunder or as otherwise provided by law. If Tenant fails to surrender the Premises on the expiration of this Lease and/or to remove all Tenant's fixture and/or personal property pursuant to Section 9.01 hereof, Tenant shall indemnify and hold Landlord harmless for, from and against all claims, damages, loss or liability, including without limitation, any claim made by any succeeding tenant resulting from such failure to surrender by Tenant and any attorneys' fees and costs incurred by Landlord with respect to any such claim.

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17.15 Parking

Tenant shall have the right to use parking spaces or parking areas near or adjacent to the Building that are from time to time designated by Landlord for the use of Tenant and its employees. All such parking shall be on a nonexclusive, non-assigned basis. Tenant shall not use or permit its employees or invitees to use any spaces which have been specifically reserved by Landlord to other tenants or for such other uses as have been designated by appropriate governmental entities as being restricted to certain uses. Tenant shall at all times comply and cause its employees and invitees to comply with any parking rules and regulations as Landlord may from time to time reasonably adopt. At no time will Tenant use any parking spaces for storage or containers of any type or description. Landlord assumes no liability or risk for any damage that may occur to the automobile or other property of Tenant, its employees, customers or others in any parking area or Common Area of the Project.

17.16 Quiet Enjoyment

Tenant, on performing the covenants and observing the conditions of this Lease, at all times during the term shall have the peaceable enjoyment of the Premises without hindrance or disturbance by Landlord or any person claiming through or under it or any person having or claiming paramount title; provided that during the Term Landlord shall be permitted to store at the Premises, in an area of the Premises mutually agreed upon by Landlord and Tenant prior to the Commencement Date exclusively reserved to and freely accessed by Landlord without prior notice to Tenant, motors and related equipment.

17.17 Broker; Agency Disclosure

Each of Tenant and Landlord warrant that it has had no discussions, negotiations and/or other dealings with any real estate broker or agent in connection with the negotiation of this Lease other than the Broker(s) identified in Section 1.01 ("Brokers"), and that it knows of no other real estate broker or agent who is or may be entitled to any commission or finder's fee in connection with this Lease. Each of Tenant and Landlord agrees to indemnify the other and hold the other harmless from and against any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation, attorneys' fees and costs) with respect to any leasing commission or equivalent compensation alleged to be owing on account of such party's discussions, negotiations and/or dealings with any real estate broker or agent. This Section 17.17 is not intended to benefit any third parties and shall not be deemed to give any rights to brokers or finders. No commission(s) or finders fee(s) shall be paid to Tenant, employee(s) of Tenant or any unlicensed representative of Tenant.

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17.18 Landlord's Right to Perform

Upon Tenant's failure to perform any obligation of Tenant hereunder after notice from Landlord pursuant to Article 13 above (if notice is required pursuant to Article 13 above), including without limitation, the Tenant's failure to pay Tenant's insurance premiums, charges of contractors who have supplied materials or labor to the Premises, etc. Landlord shall have the right to perform such obligation of Tenant on behalf of Tenant and/or to make payment on behalf of Tenant to such parties. Tenant shall reimburse Landlord the reasonable cost of Landlord's performing such obligation on Tenant's behalf, including reimbursement of any amounts that may be expended by Landlord, plus interest at the Default Rate, as Additional Rent.

17.19 Assignment by landlord

Landlord may freely sell, assign or otherwise transfer all or any portion of its interest under this Lease or in the Premises or in the building or the land that comprise the Premises, and in the event of any such transfer, the party originally executing this Lease as Landlord, and any successor or affiliate of such party, shall be relieved of any and all of its obligations under this Lease from and after the date of such transfer, provided that Landlord is not in default of this Lease at the time of transfer. Tenant shall thereafter be bound to the transferee with the same effect as though the latter had been the original Landlord hereunder, provided that the transferee assumes and agrees to carry out all the obligations of Landlord hereunder. In the event of a sale, conveyance, or other transfer by Landlord of the Building, the Project, or portion thereof on which the Building is located, or the Project or in the event of an assignment of this Lease by Landlord, the same shall operate to release Landlord from any further liability upon any of the covenants or conditions, express or implied, herein contained on the part of Landlord, and from any and all further liability, obligations, costs and expenses, demands, causes of action, claims or judgments arising out of this Lease from and after the effective date of said release, except in regards to any prepaid rent and/or security deposit held by the landlord, which, without tenant's consent, Landlord shall remain liable to Tenant unless the new landlord has actually deposited such funds in a trust account for Tenant's benefit. In such event, Tenant agrees to look solely to the successor in interest of transferor. If any Security Deposit is given by Tenant to secure performance of Tenant's covenants hereunder, Landlord may transfer such Security Deposit to any purchaser and thereupon Landlord shall be discharged from any further liability in reference thereto. Notwithstanding anything in this Lease to the contrary, however, (i) in no event shall Landlord's lender, who may have succeeded to the interest of Landlord by foreclosure, deed in lieu of foreclosure, or any other means, have any liability for any obligation of Landlord to protect, defend, indemnify or hold harmless Tenant or any other person or entity except for those matters arising from the lender's breach of the terms of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any other means, and (ii) such succeeding lender shall have no liability for any representations or warranties of the Landlord contained herein except for those matters arising from the lender's breach of the terms of this Lease after the date of such foreclosure, deed in lieu of foreclosure or any other means.

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17.20 Entire Agreement

This Lease sets forth all covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Building and the Project, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between Landlord and Tenant other than as are herein set forth. No subsequent alteration, amendment, change or addition to the Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by Landlord and Tenant.

17.21 Guarantor

Tenant's obligations under this Lease are guaranteed by the Guarantor(s) identified in Exhibit E of this lease ("Guarantor"), to be evidenced by an instrument of guaranty. This Lease is not effective until such instrument has been executed and delivered by Guarantor(s) to Landlord.

17.22 Exhibits

Exhibits A through Exhibits E and any additional Exhibits added and attached to this Lease are by this reference incorporated herein.

17.23 Time

Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.

17.24 Prior Agreement or Amendment

This Lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in the Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provisions of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors-in-interest.

17.25 Excused Delays

Except as otherwise set forth in this Section 17.26, neither party shall have liability to the other on account of the following acts (each of which is an "Excused Delay" and jointly all of which are "Excused Delays")" which shall include: (a) the inability to fulfill, or delay in fulfilling, any obligations under this Lease by reason of strike, lockout, other labor trouble, dispute or disturbance; (b) governmental regulation, moratorium, action, preemption or priorities or other controls of general application; (c) shortages of fuel, supplies or labor; (d) any failure or defect in the supply, quantity or character of electricity or water furnished to the Premises by reason of any requirement, act or omission of the public utility or others furnishing the Building with electricity or water; or (e) for any other reason, whether similar or dissimilar to the above, or for act of God beyond a party's reasonable control. If this Lease specifies a time period for performance of an obligation of a party, that time period shall be extended by the period of any delay in the party's performance caused by any of the events of Excused Delay described herein; provided, that notwithstanding anything to the contrary above, no payment of money (whether as Base Rent, Additional Rent, or any other payment due under this Lease) shall be postponed, delayed or forgiven by reason of any of the foregoing events of Excused Delay.

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17.26 Authority to Bind Tenant

The individuals signing this Lease on behalf of Tenant hereby represent and warrant that they are empowered and duly authorized to bind Tenant to this Lease. If Tenant is a corporation, limited liability company or limited or general partnership, each individual executing this Lease on behalf of Tenant represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of Tenant, in accordance with a duly adopted resolution or consents of all appropriate persons or entities required therefor and in accordance with the formation documents of tenant, and that this Lease is binding upon Tenant in accordance whit its terms. Simultaneously with execution of this Lease, Tenant shall deliver to Landlord a copy of the appropriate resolution or consent, certified by an appropriate officer, partner or manager of Tenant, authorizing or ratifying the execution of this Lease.

17.27 Interpretation

The parties hereto specifically acknowledge and agree that the terms of this Lease have been mutually negotiated and the parties hereby specifically waive the rule or principle of contract construction which provides that any ambiguity in any term or provision of a contract will be interpreted or resolved against the party which drafted such term or provision.

17.28 Patriot Act Compliance

(a) Tenant represents and warrants to, and covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates currently are, or shall be at any time during the Term hereof, in violation of any laws relating to terrorism or money laundering (collectively, the "Anti-Terrorism laws"), including without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the "Executive Order") and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the "IJSA Patriot Act"). Because of the nature of the project, both parties agree that if tenant is in compliance with Arizona State Law regarding the growing, processing and sale of marijuana, then Tenant will not be considered in breach of the above mentioned laws with regards to this lease agreement as long as the purported breach was an act wholly compliant with Arizona State Law and in no way related to furthering criminal enterprises/terrorism as originally intended by the acts described.

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(b) Tenant covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates is or shall be during the Term hereof a "Prohibited Person," which is defined as follows: (i) a person or entity that is listed in the Annex to, or is otherwise subject to, the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Landlord is prohibited from dealing with or otherwise engaging in any transaction by any Anti-Terrorism Law, including without limitation the Executive Order and the USA Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or support "terrorism" as defined in Section 3(d) of the Executive Order; (v) a person or entity that is named as a "specially designated national and blocked person" on the then-most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/tllsdn.pdf, or at any replacement website or other replacement official publication of such list; and (vi) a person or entity who is affiliated with a person or entity listed in items (i) through (v), above.

(c) At any time and from time-to-time during the Term, Tenant shall deliver to Landlord, within ten (10) days after receipt of a written request therefor, a written certification or such other evidence reasonably acceptable to Landlord evidencing and confirming Tenant's compliance with this Section 17.28 at Landlord's expense, including legal costs for obtaining said documentation that is satisfactory to the request.

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.

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

LANDLORD:	TENANT:
Zoned Properties, Inc	CCC Holdings, LLC
By /s/ Bryan McLaren	By /s/ Alan Abrams
Its Duly Authorized Agent	Its Duly Authorized Agent

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TENANT'S ACKNOWLEDGMENT

STATE OF      Arizona                                               )

COUNTY OF     Maricopa                                          ) SS.

I certify that I know or have satisfactory evidence that the person appearing before me and making this acknowledgement is the person whose true signature appears on this document.

On this Date: August 11^th 2015, before me personally appeared Alan Abrams, to me known to be the Authorized Agent of CCC Holdings, LLC, the Corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

Vanessa L Drinoczy

[Type or Print Notary Name]

/s/ Vanessa L Drinoczy

(Use This Space for Notarial Seal Stamp)

 

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LANDLORD'S ACKNOWLEDGEMENT 

STATE OF       Arizona                                               )

COUNTY OF     Maricopa                                          ) SS.

I certify that I know or have satisfactory evidence that the person appearing before me and making this acknowledgement is the person whose true signature appears on this document.

On this Date: August 11^th 2015, before me personally appeared Bryan McLaren (auth agent), to me known to be the Authorized Agent of Zoned Properties, the Corporation that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said limited liability company, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

WITNESS my hand and official seal hereto affixed the day and year first above written.

Vanessa L Drinoczy
[Type or Print Notary Name]

/s/ Vanessa L Drinoczy

(Use This Space for Notarial Seal Stamp)

 

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EXHIBIT A: LEASE COMMENCEMENT

Lease Agreement will commence as of September 1, 2015. The Landlord will waive the first month’s rent. The first security deposit payment will be made on September 1, 2015.

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EXHIBIT B: RENTAL PAYMENT SCHEDULE  

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EXHIBIT C: PROPERTY SITE AND LEGAL DESCRIPTION 

Parcel ID:	124-39-038
Property Address:	410 S. Madison Dr. Suite #1 Tempe, AZ 85281
Building and Premises:	Tempe Cultivation Site; approximately 5,000 square feet of completed warehouse located in the southern half of Suite #1. The Authority to Operate (ATO) for the Cultivation Site will be held by CJK, Inc.

 

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EXHIBIT D: TENANT OPTION TO EXTEND LEASE TERM AND FIRST RIGHT 

OPTION TO EXTEND. Tenant shall, provided the Lease is in full force and effect and Tenant is not in default under any of the terms and conditions of the Lease at the time of notification or commencement, have two (2) options to extend this Lease for a term of five (5) years as of the date the extension term is to commence, on the same terms and conditions set forth in the Lease, except as modified by the terms, covenants and conditions as set forth below:

(a) If Tenant elects to exercise said option, then Tenant shall provide Landlord with written notice no earlier than the date which is 12 months (12) months prior to the expiration of the term of the Lease but no later than the date which is six (6) months prior to the expiration of the term of the Lease. If Tenant fails to provide such notice, Tenant shall have no further or additional right to extend or renew the term of the Lease.

(b) The Annual Rent in effect at the expiration of the term of the Lease shall be adjusted to reflect the current Base Rent plus 5% increase annually.

(c) This option is not transferable; the parties hereto acknowledge and agree that they intend that the aforesaid option to extend this Lease shall be “personal” to Tenant as set forth above and that in no event will any assignee or sublessee have any rights to exercise the aforesaid option to extend.

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EXHIBIT E: GUARANTY OF PAYMENT AND PERFORMANCE

The undersigned Guarantors hereby unconditionally guaranty the full payment and performance of each and every term, covenant and condition of that certain Commercial Lease Agreement by and between Zoned Properties, Inc., as Landlord, and CCC Holdings, LLC, as Tenant, to be performed by Tenant including, but not limited to the payment of the monthly rent to Landlord and the performance of all obligations of Tenant with regard to the “Premises” described in the Lease. The undersigned further agree that this Guaranty shall not be released, diminished or otherwise affected by any assignment, subletting or transfer of the business at issue or the leased premises or by the bankruptcy, reorganization or insolvency of Tenant or of any successor(s) or assignee(s) of Tenant or by the granting of extensions of time by the owner(s) of the Premises at issue for performance of any of the terms and provisions of said Lease.

The liability of the undersigned under this Guaranty shall be primary and, in any right of action which shall accrue to Landlord and/or to its successors and/or assigns under said lease, Landlord and/or its successors and/or assigns, Landlord, its successors and/or assigns may, at their option, proceed against the undersigned without having commenced any action against Tenant or against any successors or assigns of Tenant. The undersigned agree to pay Landlord’s reasonable attorney fees, all reasonable costs and all other reasonable expenses incurred in enforcing this Guaranty, regardless of whether a lawsuit is filed or contested.

The undersigned hereby waive notice of any demand by Landlord, its successor and/or assigns, as well as any notice of default given to Tenant or to any successor(s) or assign(s) of Tenant. The undersigned waive any right, statutory or otherwise, to be discharged from liability hereunder by reason of Landlord’s failure, after demand from the undersigned, to bring suit against Tenant. The undersigned Guarantors or assignee(s) of Tenant waive Landlord’s written acceptance of this Guaranty. 

/s/ Alan Abrams	8/11/2015
Alan Abrams, Individually	Date
SUBSCRIBED AND SWORN to before me this 11th day of. August, 2015
	Vanessa L Drinoczy
	Notary Public

My commission expires:
1-26-2016
STATE OF ARIZONA	)
	) ss.
County of Maricopa	)

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EX-10.10

Exhibit 10.10

FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT

This First Amendment to the Commercial Lease Agreement (the “FIRST AMENDMENT” ) is made this 25^th day of of September, 2015, (the “EFFECTIVE” DATE) by and between Zoned Properties, Inc., CCC Holdings, LLC. And Alan Abrams, Individually as Personal Guarantor.

WITNESSETH:

WHEREAS, Landlord and Tenant heretofore entered into a Commercial Lease Agreement (the “LEASE”) executed and effective as of August 15, 2015 for the lease on the facilities commonly known as 410 S Madison Dr. Suite 1, Tempe , AZ 85281; and

WHEREAS, The parties hereto desire to change the name of the current tenant name from CCC Holdings, LLC to C3C3 Group, LLC.

WHEREAS, all defined terms used in the Lease shall have the same meaning herein as therein.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for good and valuable consideration, the sufficiency and receipt of which is acknowledged, the Parties agree as follows:

1. Tenant Name. The Tenant Name to be C3C3 Group, LLC.

Your signature below will indicate that you agree to the basic terms and conditions as set forth herein.

Zoned Properties, Inc.		CCC Holdings, LLC.
By:		By:
Name:		Name:
Title:		Title:
Alan Abrams, Individually.		C3C3 Group, LLC.
By:		By:
Name:		Name:
Title:	Personal Guarantor	Title:

EX-10.11

Exhibit 10.11

LEASE AGREEMENT

This Lease is entered into effective as of October 1, 2014 (the “Commencement Date”), between Broken Arrow Herbal Center, Inc., an Arizona corporation ("Tenant"), and Green Valley Group, LLC, an Arizona limited liability company ("Landlord").

1. PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord, that certain office real property and improvements thereon located at 1732 West Commerce Point Place, Sahuarita, Arizona (“Premises”).

2. TERM. The term of this Lease shall be for a period of ten (10) years (“Term”) commencing as of the Commencement Date and shall terminate on September 30, 2024.

3. RENT.

3.1 Net, Net, Net Lease. Landlord and Tenant understand and agree that this Lease is what is commonly referred to as a “net, net, net” Lease, NNN, or triple net lease. Tenant recognizes and acknowledges, without limiting the generality of any other terms or provisions of this lease, that it is the intent of the parties hereto that any and all rentals in this lease provided to be paid be Tenant to Landlord, shall be net to the Landlord, and any and all expenses incurred in connection with the Common Areas, the Premises, and the Center or in connection with the operations thereon, including any and all taxes, assessments, general or special, license fees, insurance premiums, public utility bills, management and administrative fees and costs of repair, maintenance and operation of the Common Areas, the Premises, and the Center and all buildings, structures, permanent textures and other improvements comprised therein, together with the appurtenance thereto, shall be paid by Tenant.

3.2 Tenant shall pay to Landlord as Rent for the Premises in advance each month at the rate pursuant to section 3.3 as of October 1, 2014, and on or before the first day of each month thereafter; provided that, upon the date that Landlord and Tenant shall execute this Lease (“Execution Date”), Tenant shall pay to Landlord the sum of $7,500.00 (representing prepayment of the first months’ Rent) plus applicable rental tax.

3.3 Beginning with the first Rental payment due on October 1, 2014, rental payments will be pursuant to the following schedule: for months 1 through 6 of tenancy (October 1, 2014 through March 31, 2015) rent shall be $7,500 due on or before the first of the month. For months 7 through 12 of tenancy (April 1, 2015 through September 31, 2015) rent shall be $9,500 due on or before the first of the month. For the second rental year of tenancy (October 1, 2015 – September 30, 2016) rent shall be $9,975 due on or before the first of each month. And every twelve (12) months thereafter (each, a “Lease Year”), the Rent of each Lease Year commencing with October 1, 2016, will be increased on a cumulative basis by five percent (5.00%) each year thereafter. For Example, lease payments in year three beginning October 1, 2016 will be $10,474 per month, lease payments in year four beginning October 1, 2017 will be $10,997 per month, etc. 

 

3.4 All Rent due hereunder shall be paid by Tenant to Landlord at 16624 N. 90^th Street, Suite 101, Scottsdale, Arizona 85260, or at such other place as Landlord may from time to time designate.

3.5 REAL PROPERTY TAXES AND ASSESSMENTS, PERSONAL PROPERTY TAXES AND ASSOCIATION FEES AND ASSESSMENTS. Together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the prior calendar year’s real property taxes and assessments with respect to the Premises and one-twelfth (1/12^th) of the then current calendar’s year’s association assessments and fees (if any) with respect to the Premises each month. Subject to such payment, Landlord shall pay such taxes, assessments and fees to the respective taxing authority and office association. In addition, Tenant shall pay all personal property taxes with respect to any property of Tenant or any subtenant in or upon the Premises prior to delinquency and directly to the respective taxing authority on or before the last day upon which the same may be paid without interest or penalty, and Tenant shall deliver to Landlord reasonable documentation evidencing Tenant’s compliance with the foregoing payment obligations

3.6. RENTAL TAX. In addition to the Rent which Tenant is required to pay Landlord herein, Tenant shall pay Landlord all transaction privilege, sales, rental and/or other taxes or licenses (but excluding income or estate taxes charged against Landlord) levied upon or assessed against Landlord by any governmental authority having jurisdiction, which are measured by the Rent or other charges in any form paid by Tenant to Landlord hereunder. The amount required to be paid by Tenant to Landlord pursuant to the immediately preceding sentence shall be paid at the time the applicable Rent is due or other charges are due and shall be considered as payment of taxes or licenses, as the case may be, and not for the payment of Rent.

4. SECURITY DEPOSIT. Tenant shall pay to Landlord, upon the Execution Date, a refundable security deposit in the sum of $7,500.00 plus applicable rental tax in connection with this Lease. If Tenant defaults with respect to any provision of the Lease after applicable grace period, Landlord may (but shall not be required to) use, apply or retain all or any part of the Security Deposit for the payment of any rent or any other sum in default. If any portion of the Security Deposit is so used, applied or retained, Tenant shall, within fifteen (15) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount, and Tenant's failure to do so shall be a default under the Lease. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. If Tenant shall fully and faithfully perform every term and condition of the Lease to be performed by it, Tenant shall be entitled to a refund of the Security Deposit.

 

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5. UTILITIES AND SERVICES. Tenant shall arrange and pay (before delinquent) for the supply of all heat, air conditioning, electricity, water, and natural gas consumed by Tenant upon the Premises or utilized in the Premises. Tenant will supply and pay (before delinquent) for all telephone and trash collection services to the Premises.

6. REPAIRS AND MAINTENANCE. Tenant shall be responsible for the repair and maintenance of the Premises, excluding damages as the result of normal wear and tear or degradation and excluding the roof, exterior walls, foundation, and underground utilities. Tenant shall maintain the above ground plumbing and electrical systems, parking and driveway areas and landscaping of the Premises, reasonable wear and tear excepted and shall provide janitorial and cleaning services for the Premises at Tenant’s expense. Without limiting the generality of the foregoing, Tenant shall remove all new graffiti on the Premises within forty-eight (48) hours after such graffiti shall be placed on the Premises and shall promptly repair, in a good and workmanlike manner, any damage to the Premises caused by any act or omission of Tenant, or of any employee, agent or invitee of Tenant, or failing to do so after the expiration of applicable notice and cure periods, Tenant shall pay Landlord for the cost of all such repairs, whereupon Landlord shall cause such repairs to be completed.

7. PURPOSE. Tenant shall use and occupy the Premises only for the purpose of operating an Arizona Department of Health Services-licensed (or legally-permitted recreational) medical marijuana dispensary or cultivation location and for no other purpose whatsoever. Immediately upon Tenant’s or subtenant’s receipt of any and all permits and licenses relative to the Premises and the use of the Premises, copies of such permits and licenses shall be delivered to Landlord.

8. SIGNAGE. Tenant may install and shall maintain at its sole expense, any and all signs upon the interior and exterior of the Premises, subject to the reasonable approval of Landlord and the approval of all local and County governmental agencies that are required to approve said signage.

9. INSURANCE.

9.1 Tenant agrees to obtain and keep in force during the Term, at Tenant's sole expense, the following insurance:

9.1.1 Public liability insurance to protect against any liability to the public incident to the use of or resulting from any accident occurring in or about the Premises, the liability under such insurance to be not less than $2,000,000.00 for any one person injured or $2,000,000.00 for any one accident and $1,000,000.00 for property damage.

 

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9.1.2 All insurance policies to be obtained by Tenant hereunder shall insure by name the Landlord, Tenant and any mortgagees, and copies thereof shall be delivered to Landlord upon the Commencement Date. Landlord shall have the right to reasonably disapprove any insurance company proposed by Tenant. Each of the foregoing original policies are to be placed with Landlord who is authorized to deliver such policies to mortgagees when required, and Tenant shall obtain a written obligation on the part of the insurance carriers to notify Landlord in writing thirty (30) days prior to any cancellation thereof, and Tenant agrees, if Tenant does not keep such insurance in full force and effect, Landlord may take out the necessary insurance and pay the premiums and the repayment thereof shall be deemed to be part of and in addition to the rental, and payment thereof shall become due, together with interest on such payment at the rate of one and one-half percent (1.5%) per month (compounded monthly), on the next rental payment date.

9.1.3 Tenant shall furnish Landlord with proof of all such insurance at least annually and at any time upon demand of Landlord.

9.2 Tenant shall obtain and keep in force during the Term casualty insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood, mold and special extended perils ("all risk" as such term is used in the insurance industry) and shall provide a copy of each such policy of insurance before this Lease is executed and continuously thereafter, with each renewal or replacement of insurance. Provided that Tenant fails to obtain the necessary insurance, Landlord may obtain the necessary insurance. In such a case, together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the premium cost of such casualty insurance. Subject to such payment, Landlord shall pay such premiums to the insurance company. The parties shall co-operate with each other, in order to avoid purchasing coverage on the same item or for the same acts and omissions.

 

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10. TERMINATION: In the event that the Landlord is specifically advised in writing by any federal, state or local government that Landlord is subject to seizure of his its property, if it does not terminate Tenant’s right to cultivate marijuana upon the Leased Premises, or if the Arizona Medical Marijuana Act (AMMA) is declared to be unenforceable or is modified to prohibit the sale or cultivation of medical marijuana upon the Leased Premises, or if any other zoning regulation, rule or regulation is modified to prohibit sale, cultivation or possession of marijuana upon the Leased Premises, Landlord or may terminate this Lease.

11. COMPLIANCE WITH LAW; AS IS. Tenant accepts the Premises strictly on an “AS IS” basis, without any representations or warranties from Landlord. Tenant agrees to be compliant with all applicable rules/laws/regulations in effect, or subsequently passed into effect, as of and after the Commencement Date.

Tenant, at its sole cost and expense, shall promptly observe and materially comply with all present and future laws, orders, regulations, rules, ordinances and requirements of any governmental agency with respect to the use, care and control of the Premises. Without limiting the generality of the foregoing, Tenant shall make any structural changes or additions to the Premises that are required, in order to comply with the requirements of its business operations. Landlord makes no representations or warranties to Tenant, and hereby disclaims any and all representations or warranties to Tenant, concerning the Premises, including without limitation, that as of the Commencement Date the Premises are (a) in compliance with all federal, state and local laws, regulations and directives for Tenant's intended use of the Premises, including without limitation the Environmental Laws, but excluding the Americans With Disabilities Act; and (b) free from and of all hazardous materials, including without limitation asbestos, lead paint and polychlorinated biphenyl; provided that Landlord represents and warrants to Tenant that Landlord has no actual knowledge, without having made any investigation or inquiry, of any present violation by the Premises of any of the Environmental Laws. "Environmental Laws" shall include, but not be limited to, the Resource, Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq.; the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 201,300f to j-9 and any and all environmental laws of the State of Arizona and any and all amendments to such Environmental Laws. Tenant agrees to hold harmless Landlord, and hereby waives all rights and claims of contribution against Landlord, with respect to any violations or alleged violations of Environmental Laws or any other federal, state and local laws, regulations and directives concerning the Premises which arise as a result of Tenant’s activities at the Premises.

12. ACCESS BY LANDLORD. Landlord, or its representatives and agents, shall have free access to the Premises at reasonable times for the purposes of inspection and/or for examining or exhibiting the same to prospective purchasers, lenders or tenants; provided that, subject to Section 20 below, Landlord shall give Tenant at least one (1) day’s written notice or by email or by phone in advance of such examination or exhibition, unless it would be impracticable to do so due to solely to an emergency concerning the Premises.

 

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13. RETURN OF PREMISES. Upon the expiration of the term of this Lease or upon its termination for any cause, except for breach of this Lease by Landlord, Tenant shall restore the Premises to the condition that Tenant received the Premises, reasonable wear and tear excepted, unless Landlord advises Tenant to not remove any structural changes or alterations. If such non-removal shall not cause additional expense to Tenant, Tenant shall not be required to remove them. Tenant shall surrender the Premises in as good order and condition as when received, reasonable wear and tear excepted.

14. HOURS OF BUSINESS. Tenant shall continuously during the entire term hereof conduct and carry on Tenant’s business in the Premises and shall keep the Premises open for business and cause Tenant’s business to be conducted therein during the usual business hours of each and every business day as is customary for businesses of like character.

15. ALTERATIONS AND MODIFICATIONS. All alterations and modifications to the Premises that Tenant may desire shall be done at the expense of Tenant, and shall become the property of Landlord and remain on the Premises (except for Tenant's removable equipment and trade fixtures) and become Landlord’s property upon the expiration or earlier termination of the Term; provided that (a) “removable equipment” shall mean equipment that is not permanently bolted, screwed or otherwise affixed to any walls, ceiling or floor of the Premises, and (b) Tenant shall not make any alterations and modifications to the Premises without first obtaining the prior written approval of Landlord, which approval shall not be unreasonably withheld. Any work done at the Premises shall be done by duly licensed and qualified contractors. All damage or injury done to the Premises by Tenant or any person who may be in or on the Premises with the consent of Tenant shall be paid for by Tenant.

16. LIENS AND ENCUMBRANCES. Tenant shall keep the Premises free and clear of any liens or encumbrances imposed on the Premises by reason of any contract, act or omission of Tenant. Tenant shall have the full right and authority to contest the validity of any such liens or encumbrances, at Tenant's expense, and Landlord shall cooperate with all such contest actions, including without limitation, signing all consents and other documents reasonably requested by Tenant or its agents in connection with such contest actions; provided that Tenant shall not only bear the expense of such contests, but that such contest shall be undertaken at Tenant's risk as to liability for payment of any applicable liens or encumbrances, and of penalties and/or interest imposed on any delinquencies related thereto. Landlord may require, at Landlord’s sole option that Tenant shall provide to Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an amount equal to one and one-half (1 ½) times the estimated cost of any improvements, additions, or alterations, in the Premises which the Tenant desire to make, to insure Landlord against any liability for mechanics’ and material men’s liens and to insure completion of the work.

 

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17. DEFAULTS AND REMEDIES.

17.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant:

17.1.1 The vacating or abandonment of the Premises by Tenant for more than thirty (30) days.

17.1.2 The failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder within three (3) business days after the due date (without any requirement of notice from Landlord, except that notice is required with regard to all items except Rent and normal, monthly rental taxes).

17.1.3 The failure by Tenant to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Tenant, other than described in Section 17.1.2, where such failure shall continue for a period of fifteen (10) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than fifteen (10) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said 10-day period and thereafter diligently prosecutes such cure to completion.

17.1.4 (a) The making by Tenant of and general assignment, or general arrangement for the benefit of creditors; (b) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (c) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within sixty (60) days; or (d) the attachment, execution, or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within sixty (60) days.

 

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17.2 Remedies. In the event of any such uncured default or breach by Tenant, Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord on the exercise of any right or remedy which Landlord may have by reason of such default or breach, enter and/or taking of possession of the Premises without a court order. Landlord may proceed by forcible detainer or by other judicial remedy to obtain possession of the Premises.

17.2.1 Landlord shall not have the immediate right of re-entry (with or without notice) and may not remove all persons and property (subject to applicable law) from the Premises without first obtaining a court order allowing Landlord to take possession of the Premises. If Landlord obtains a court order for possession or if Tenant shall abandon the Premises for more than thirty (30) days, all property left on the Premises will be considered abandoned and may be sold, removed, or stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.

17.2.2 Should Landlord elect to re-enter as herein provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may either terminate this Lease or may from time to time, without terminating this Lease, re-let said premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in Landlord's sole discretion may deem advisable with the right to make reasonable alterations and repairs to the Premises.

17.2.3 Upon each such re-letting (a) Tenant shall be immediately liable to pay to Landlord, in addition to any indebtedness other than rent due hereunder, for the reasonable cost and expenses of such re-letting and of such alterations and repairs incurred by Landlord and the amount, if any, by which the rent reserved in this Lease for the period of such re-letting (up to but not beyond the term of this Lease) exceeds the amount agreed to be paid as rent for the Premises for such period on such re-letting, or (b) at the option of Landlord, rents received by such Landlord from such re-letting shall be applied, first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord, second to the payment of any reasonable costs and expenses of such re-letting and of such alterations and repairs, and third to the payment of rent due and unpaid hereunder, and the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If Tenant has been credited with any rent to be received by such re-letting under option (a), and such rent shall not be promptly paid to Landlord by the new tenant, or if such rentals received from such re-letting under option (b) during any month shall be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly.

 

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17.2.4 No such re-entry or taking possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention be given to Tenant. Notwithstanding any such re-letting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach, unless such previous breach has already been cured by Tenant.

17.2.6 Pursue any other remedy not inconsistent with the foregoing now or hereafter available to Landlord under the laws or judicial decisions of the State of Arizona.

17.2.7 In addition to the foregoing rights and remedies of Landlord, Tenant acknowledges that late payment by Tenant to Landlord of Rent or other sums due hereunder will cause Landlord to incur expenses in an amount that will be impracticable or extremely difficult to ascertain. Accordingly, if any installment of rent or any sum due from Tenant is not received by Landlord when due, Tenant shall pay to Landlord as liquidated damages, a late charge equal to ten percent (10%) of such overdue amount. The parties hereby agree that this late charge represents a fair and reasonable estimate of the cost that Landlord will incur, in addition to interest on the money involved, because of the late payment by Tenant. Landlord’s failure to demand the payment of late charges on one or more occasions shall not constitute a waiver of landlord’s right to demand payment of past due late charges. Acceptance of late charges by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor shall such acceptance prevent Landlord from exercising any of the other rights and remedies granted hereunder. In addition, because of late payment or any other default by Tenant under this Lease, Landlord may also incur attorney’s fees for services whether or not in connection with litigation, and Tenant shall pay the reasonable attorney’s fees incurred by Landlord for these services.

 

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17.3 Default by Landlord. Landlord shall not be in default unless Landlord fails to perform obligations required by Landlord within a reasonable time, but in no event later than thirty (45) days after written notice by Tenant to Landlord specifying wherein Landlord has failed to perform such obligations; provided however, that if the nature of Landlord's obligation is such that more than thirty (45) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such 45-day period and thereafter diligently prosecutes the same to completion. Landlord shall not be deemed in default hereunder as long as Tenant shall be in default hereunder.

17.4 Attorney’s Fees. In addition to the provisions of Section 17.2 above in favor of Landlord, the substantially prevailing party in any lawsuit involving the enforcement or interpretation of this Lease shall be entitled to recover from the substantially non-prevailing party the attorney’s fees and costs reasonably incurred by the substantially prevailing party.

18. DESTRUCTION OR CASUALTY. In the event that the Premises are injured, damaged or destroyed by act of God, by fire or other casualty, and Landlord in its sole discretion decides not to repair or restore the Premises, Tenant or Landlord shall have an option to terminate this Lease as of the date of such injury, damage or destruction. This option shall be exercised upon the giving of written notice to Landlord or Tenant, as the case may be, within sixty (60) days following the destruction, injury or damage. In the event that Landlord determines to repair and restore the Premises, Landlord shall so advise Tenant in writing within sixty (60) days following the destruction, injury or damage, and shall proceed with due diligence to effect repairs or reconstruction. During the period of repair or reconstruction, this Lease shall continue in full force and effect; provided, however, that Tenant shall be entitled to a reduction of Rent from the date of such destruction, injury or damage until the repairs or reconstruction are completed in an amount proportionate to the extent to which such damage, injury or destruction and the making of repairs or reconstruction interferes with the occupancy by or business operations of Tenant with respect to the Premises.

 

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19. CONDEMNATION. In the event that all or any portion of the Premises shall be taken by eminent domain or condemnation by any governmental or other authority having jurisdiction to do so, Landlord shall be entitled to receive, and Tenant hereby assigns completely to Landlord, all proceeds payable by such authority(ies) in connection with such taking, except that Tenant shall be entitled to recover from such authority(ies) only compensation for relocation expenses to the extent payable by such authority(ies). Tenant shall be entitled to a reduction of rent from the date of such taking in an amount proportionate to the extent to which such taking interferes with the occupancy by or business operations of Tenant with respect to the Premises. In the event that more than ten percent (10%) of exterior portions of the Premises or if any interior portion of any structure on the Premises are taken, Tenant may terminate this Lease, effective as of the date of actual delivery of possession to the condemning authority.

20. QUIET ENJOYMENT. Tenant, on performing the covenants and observing the conditions of this Lease, at all times during the term shall have the peaceable enjoyment of the Premises without hindrance or disturbance by Landlord or any person claiming through or under it or any person having or claiming paramount title; provided that during the Term Landlord shall be permitted to store at the Premises, in an area of the Premises mutually agreed upon by Landlord and Tenant prior to the Commencement Date exclusively reserved to and freely accessed by Landlord without prior notice to Tenant, motors and related equipment.

21. ASSIGNMENT. Landlord may freely sell, assign or otherwise transfer all or any portion of its interest under this Lease or in the Premises or in the building or the land that comprise the Premises, and in the event of any such transfer, the party originally executing this Lease as Landlord, and any successor or affiliate of such party, shall be relieved of any and all of its obligations under this Lease from and after the date of such transfer, provided that Landlord is not in default of this Lease at the time of transfer. Tenant shall thereafter be bound to the transferee with the same effect as though the latter had been the original Landlord hereunder, provided that the transferee assumes and agrees to carry out all the obligations of Landlord hereunder.

No assignment or sublease of the Premises by Tenant shall be binding upon Landlord or confer any rights on the proposed assignee or subtenant without the prior written consent of Landlord, which Landlord may withhold in its sole discretion. Upon any assignment so approved by Landlord, Tenant shall not be relieved of any liability with respect to this Lease. In the event of any approved assignment or sublease by Tenant, Tenant shall pay to Landlord any and all attorney’s fees and costs incurred by Landlord in its review and approval of the assignment and/or sublease transaction and in the preparation and/or review of all documents related thereto, up to a total charge of one thousand dollars ($1,000.00).

22. NOTICES. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Landlord at 16624 N. 90^th Street #101, Scottsdale, Arizona 85260. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Tenant at 2095 Northern Avenue, Kingman, Arizona and/or 16624 N. 90^th Street #200, Scottsdale, Arizona 85260, or to such other address as Tenant or Landlord may designate by written notice to the other. Each such notice shall be deemed given on the date it is personally delivered, or if mailed, on the date of mailing.

 

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23. PRIOR AGREEMENTS This Lease constitutes the entire agreement between the parties and supersedes and cancels any and all prior agreements between the parties relating to the subject matter hereof.

24. BENEFITS. This Lease shall bind and inure to the benefit of the parties hereto and their respective administrators, legal representatives, successors and assigns, but neither this Lease nor any right or obligation hereunder shall be assigned by any party except as provided in this Lease.

25. FURTHER ASSURANCES. The parties hereto shall execute and deliver all such other instruments and take all such other actions as any party may reasonably request from time to time in order to effect the terms and conditions of this Lease. The parties shall cooperate with each other and with their respective counsel and accountants in connection with any actions to be taken as a part of their respective obligations under this Lease.

26. GOVERNING LAW, DISPUTE RESOLUTION AND VENUE. This Lease shall be construed in accordance with the laws of the State of Arizona. In the event of any dispute, venue shall be the state court located in Maricopa County, Arizona.

In the event a party is in breach of this Agreement and the failure of a party to cure said breach in a timely manner, pursuant to this Agreement, to the other party’s satisfaction within the period set forth herein, the other party or parties, in addition to and not in limitation of any other rights and remedies available to such other party or parties at law or in equity, shall have the right to seek injunctive relief and/or the appointment of a receiver.

The forgoing notwithstanding, the parties hereby agree to attempt to resolve all differences among themselves by nonbinding mediation. In the event of a dispute, either party may demand mediation (a settlement conference). If the parties fail to agree upon a mediator within five (5) business days of demand for mediation, either party may petition the Maricopa County Superior Court for the appointment of a mediator. If the dispute is not resolved by agreement of all parties within thirty (30) calendar days of the appointment of a mediator, or within forty-five (45) days after the written request for mediation is transmitted to the other party, either party may commence arbitration. The parties shall split the mediator’s fee.

If mediation is not timely commenced or fails, all disputes among the parties to this Agreement shall be settled by binding arbitration, by one arbitrator, according to the Arizona Revised Statutes and the Arizona Rules of Civil Procedure. If the parties cannot unanimously agree upon an arbitrator, any person or entity involved in the dispute may petition the Maricopa County Superior Court for the appointment of an arbitrator. The parties to the arbitration shall split the arbitrator’s fees equally. The arbitrator’s decision shall be final and binding and may be enforced according to the Uniform Arbitration Act and/or enforced in any court of competent jurisdiction. The arbitrator may award injunctive relief and may award attorney fees and/or costs to the prevailing party or parties.

 

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27. WAIVER. No failure or delay on the part of either party in exercising any right, power or privilege under this Lease shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof. The rights and remedies expressly specified in this Lease are cumulative and are not exclusive of any other rights or remedies which either party would otherwise have.

28. CAPTIONS. All section titles or captions contained in this Lease are for convenience only and shall not be deemed part of this Lease.

29. SEVERABILITY. The provisions of this Lease are severable and the holding of any one provision as invalid or unenforceable shall have no effect on any other provision.

30. COUNTERPARTS. This Lease may be executed simultaneously in two (2) or more counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Lease to produce or account for more than one such counterpart.

31. FOR RENT AND FOR SALE SIGNS. Landlord may post any "for sale" or "for rent" signs on or at the Premises and exhibit the Premises during normal business hours to prospective buyers and tenants, from time to time.

32. ESTOPPEL CERTIFICATE. Landlord and Tenant shall, at any time and from time to time, within ten (10) business days after written request from the other party, execute, acknowledge and deliver to the requesting party a statement in writing: (a) certifying that the Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying that the Lease, as so modified, is in full force and effect; (b) certifying the dates to which the Rent and other charges are paid in advance, if any; and (c) acknowledging that there are not, to such party's knowledge, any uncured defaults on the part of the requesting party hereunder, or specifying such defaults if they are claimed. Any such statement may be relied upon by any prospective purchaser or lender of all or any portion of the Premises or any leasehold interest therein. The failure to deliver such statement within such time shall be conclusive and binding upon the party upon whom the request is made 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 on the requesting party's performance; and (iii) no Rent has been paid in advance. If Tenant is required or requested to execute more than one estoppel certificate or similar document in any twelve (12) month period, Landlord shall reimburse Tenant for its legal fees incurred in having such documents reviewed, up to a total charge of five hundred dollars ($500.00).

 

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33. COMMISSIONS. Landlord and Tenant acknowledge that neither of them has engaged the services of a real estate broker, salesperson or finder who has provided real estate brokerage services in connection with this transaction, and is entitled to a commission. Landlord and Tenant agree to indemnify and hold each other harmless in connection therewith.

34. USE AND SUITABILITY OF PREMISES. Tenant acknowledges that neither Landlord nor Landlord’s agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant’s business, or that Tenant’s proposed use of the Premises or its manner of operation are in compliance with applicable laws or governmental regulations. It is the Tenant’s sole responsibility to obtain building permits and/or occupancy permits, if required, and to correct code violations or code violations resulting from changed or updated code requirements. Landlord shall not be liable for any delays or costs in obtaining said permits and Tenant shall not withhold rents in the event of any delays or unexpected costs. Landlord and Landlord’s agent shall not, under any circumstances, be obligated to investigate or confirm the permissibility, propriety, or legality of Tenant’s proposed use. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything within the Premises which will in any way increase the existing rate of or affect any fire or other insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy covering said Building or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other Tenants or occupants of the building or injure or annoy them or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose; nor shall Tenant cause, maintain or permit any nuisance in, or about the Premises. Tenant shall not commit or allow to be committed any waste in or upon the Premises. Tenant shall not use the Premises, or permit anything to be done on or about the Premises, which will in anyway conflict with any law, statue, ordinance or governmental rule or regulation in force or which may hereafter be enacted or promulgated. Tenant shall at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not related to or affected by Tenant’s improvements or acts.

35. SALE OF THE PREMISES BY LANDLORD. In the event of any sale of the Premises and/or the Shopping Center by Landlord, IF ANY, Landlord shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale; and the purchaser, at such sale or any subsequent sale of the Premises shall be deemed without any further agreement between the parties of their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease.

 

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36. HOLD HARMLESS AND INDEMNIFICATION. Notwithstanding any provision to the contrary contained herein:

36.1 Neither Landlord nor any of its agents or employees shall have any liability to Tenant, or to Tenant’s employees, agents, contractors, subtenants, invitees, patients or customers for any damage, injury, loss or claims based on or arising out of any cause whatsoever, including, without limitation, the following: repair to any portion of the Premises; interruption in the use of the Premises or any equipment therein; any accident or damage resulting from any use or operation by Landlord, Tenant or any other person or entity of elevators or heating, cooling, electrical, sewerage or plumbing equipment or apparatus; termination of this Lease by reason of damage to the Premises; fire, robbery, theft, vandalism, mysterious disappearance or any other casualty; actions of any other person or entity; failure or inability to furnish any service specified in this Lease; and leakage in any part of the Premises from water, rain, ice or snow that may leak into, or flow from, any part of the Premises, or from drains, pipes or plumbing fixtures in the Premises. Any property placed by Tenant in or about the Premises shall be at the sole risk of Tenant, and Landlord shall not in any manner be responsible therefor. Notwithstanding the foregoing, Landlord shall not be released from liability to Tenant for and to the extent of any injury caused by Landlord’s willful misconduct or negligence or the willful misconduct or negligence of any of Landlord’s employees, agents, partners contractors, employees, subtenants or invitees, unless Tenant is fully compensated for its loss by insurance proceeds.

36.2 Unless Landlord’s losses are recovered by insurance proceeds, Tenant shall reimburse Landlord for, and shall indemnify, protect, defend and hold Landlord, its employees and agents harmless from and against all costs, damages, claims, liabilities, expenses (including attorneys’ fees, disbursements and actual costs), losses and court costs suffered by or claimed against Landlord, directly or indirectly, based on or arising out of, in whole or in part, (i) the use and occupancy of the Premises or the business conducted therein by Tenant, its agents, contractors, employees, subtenants or invitees, (ii) any act or omission of Tenant, its agents, contractors, employees, subtenants or invitees; or (iii) any breach of Tenant’s obligations under this Lease.

37. PROHIBITED PERSONS AND TRANSACTIONS. Tenant represents and warrants to Landlord that as of the Commencement Date, Tenant is currently in compliance with, and Tenant further covenants to Landlord that Tenant shall at all times during the term of the Lease (including any extension thereof) remain in compliance with, the regulations of the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury (including those named on OFAC’s Specially Designated Nationals and Blocked Persons List) and any statute, executive order (including, but not limited to, Executive Order 13224, dated September 24, 2001 and entitled “Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism”), or other governmental, regulatory, or administrative action relating thereto and the Americans with Disabilities Act (“ADA”).

 

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IN WITNESS WHEREOF, the parties have set their names effective as of the Commencement Date above set forth.

LANDLORD:

Green Valley Group, LLC an Arizona limited liability partnership

 

By_______________________________________

Its Duly Authorized Agent

TENANT:

Broken Arrow Herbal Center, Inc., an Arizona corporation

 

 

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Addendum to the Lease

Compliance terms for Medical Marijuana Facility

1. Lessee acknowledges that neither the lessor nor lessor’s representatives have made any oral or written representations or warranties whatsoever concerning the suitability or zoning of the property with respect to its potential use as a medical marijuana facility, and that it is the sole responsibility of the Lessee to investigate and to satisfy itself concerning the suitability of the property for such use.

2. Lessee understands and agrees that Lessee, and not Lessor, shall be solely responsible at the Lessee’s own expense for full compliance with all state and local laws, rules, regulations and ordinances pertaining to the maintenance and/or operation of a medical marijuana cultivation facility.

3. Lessee warrants and represents that it is eligible and qualified to operate a medical marijuana facility in the property under all applicable state and local laws rules, regulations and ordinances, and that Lessee has obtained all legally required licenses, permits, and approvals to do so before commencing operations on the property.

4. Lessee shall indemnify, defend and hold harmless Lessor, its trustees, agents, employees, and lenders from and against all damages, liabilities, judgments, claims, expenses, penalties, and attorney and consultant fees arising out of or connected in any way to Lessee’s violation or alleged violation of any federal, state, or local law, rule, regulation or ordinance, whether or not litigation or prosecution is actually commences against Lessor, its trustees, agents, employees or lenders.

5. Lessee shall provide notice to Lessor immediately in the event of the revocation, suspension, expiration, transfer, or surrender of Lessee’s lawful authority to operate a medical marijuana facility. Such revocation, suspension, expiration, transfer or surrender, or Lessee’s failure to provide immediate notice thereof to Lessor, shall constitute a Breach of the Lease entitling Lessor at its sole discretion to terminate the lease.  

LANDLORD:	TENANT:
Green Valley Group, LLC an Arizona limited liability partnership	Broken Arrow Herbal Center, Inc., an Arizona corporation

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EX-10.12

Exhibit 10.12

LEASE AGREEMENT

This Lease is entered into effective as of October 1, 2014 ("Commencement Date"), between CJK, Inc., an Arizona corporation ("Tenant"), and Kingman Property Group, LLC, an Arizona limited liability company ("Landlord").

1.        PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord, that certain office real property and improvements thereon located at 2095 Northern Avenue, Kingman, Arizona ("Premises").

2.        TERM. The term of this Lease shall be for a period of ten (10) years ("Term") commencing as of the Commencement Date and shall terminate on September 30, 2024.

3.        RENT.

3.1       Net, Net, Net Lease. Landlord and Tenant understand and agree that this Lease is what is commonly referred to as a "net, net, net" Lease, NNN, or triple net lease. Tenant recognizes and acknowledges, without limiting the generality of any other terms or provisions of this lease, that it is the intent of the parties hereto that any and all rentals in this lease provided to be paid be Tenant to Landlord, shall be net to the Landlord, and any and all expenses incurred in connection with the Common Areas, the Premises, and the Center or in connection with the operations thereon, including any and all taxes, assessments, general or special, license fees, insurance premiums, public utility bills, management and administrative fees and costs of repair, maintenance and operation of the Common Areas, the Premises, and the Center and all buildings, structures, permanent textures and other improvements comprised therein, together with the appurtenance thereto, shall be paid by Tenant.

3.2       Tenant shall pay to Landlord as Rent for the Premises in advance each month at the rate pursuant to section 3.3 as of October 1, 2014, and on or before the first day of each month thereafter; provided that, upon the date that Landlord and Tenant shall execute this Lease ("Execution Date"), Tenant shall pay to Landlord the sum of $10,000.00 (representing prepayment of the first months' Rent) plus applicable rental tax.

3.3       Beginning with the first Rental payment due on October 1, 2014, rental payments will be pursuant to the following schedule: for months 1 through 6 of tenancy (October 1, 2014 through March 31, 2015) rent shall be $10,000 due on or before the first of the month. For months 7 through 12 of tenancy (April 1, 2015 through September 31, 2015) rent shall be $12,000 due on or before the first of the month. For the second rental year of tenancy (October 1, 2015 — September 30, 2016) rent shall be $12,600 due on or before the first of each month. And every twelve (12) months thereafter (each, a "Lease Year"), the Rent of each Lease Year commencing with October 1, 2016, will be increased on a cumulative basis by five percent (5.00%) each year thereafter. For Example, lease payments in year three beginning October 1, 2016 will be $13,230 per month, lease payments in year four beginning October 1, 2017 will be $13,892 per month, etc.

3.4       All Rent due hereunder shall be paid by Tenant to Landlord at 16624 N. 90^th Street, Suite 101, Scottsdale, Arizona 85260, or at such other place as Landlord may from time to time designate.

3.5       REAL PROPERTY TAXES AND ASSESSMENTS, PERSONAL PROPERTY TAXES AND ASSOCIATION FEES AND ASSESSMENTS. Together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the prior calendar year's real property taxes and assessments with respect to the Premises and one-twelfth (1/12^th) of the then current calendar's year's association assessments and fees (if any) with respect to the Premises each month. Subject to such payment, Landlord shall pay such taxes, assessments and fees to the respective taxing authority and office association. In addition, Tenant shall pay all personal property taxes with respect to any property of Tenant or any subtenant in or upon the Premises prior to delinquency and directly to the respective taxing authority on or before the last day upon which the same may be paid without interest or penalty, and Tenant shall deliver to Landlord reasonable documentation evidencing Tenant's compliance with the foregoing payment obligations

3.6       RENTAL TAX. In addition to the Rent which Tenant is required to pay Landlord herein, Tenant shall pay Landlord all transaction privilege, sales, rental and/or other taxes or licenses (but excluding income or estate taxes charged against Landlord) levied upon or assessed against Landlord by any governmental authority having jurisdiction, which are measured by the Rent or other charges in any form paid by Tenant to Landlord hereunder. The amount required to be paid by Tenant to Landlord pursuant to the immediately preceding sentence shall be paid at the time the applicable Rent is due or other charges are due and shall be considered as payment of taxes or licenses, as the case may be, and not for the payment of Rent.

4.        SECURITY DEPOSIT. Tenant shall pay to Landlord, upon the Execution Date, a refundable security deposit in the sum of $7,500.00 plus applicable rental tax in connection with this Lease. If Tenant defaults with respect to any provision of the Lease after applicable grace period, Landlord may (but shall not be required to) use, apply or retain all or any part of the Security Deposit for the payment of any rent or any other sum in default. If any portion of the Security Deposit is so used, applied or retained, Tenant shall, within fifteen (15) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the security deposit to its original amount, and Tenant's failure to do so shall be a default under the Lease. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. If Tenant shall fully and faithfully perform every term and condition of the Lease to be performed by it, Tenant shall be entitled to a refund of the Security Deposit.

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5.        UTILITIES AND SERVICES. Tenant shall arrange and pay (before delinquent) for the supply of all heat, air conditioning, electricity, water, and natural gas consumed by Tenant upon the Premises or utilized in the Premises. Tenant will supply and pay (before delinquent) for all telephone and trash collection services to the Premises.

6.        REPAIRS AND MAINTENANCE. Tenant shall be responsible for the repair and maintenance of the Premises, excluding damages as the result of normal wear and tear or degradation and excluding the roof, exterior walls, foundation, and underground utilities. Tenant shall maintain the above ground plumbing and electrical systems, parking and driveway areas and landscaping of the Premises, reasonable wear and tear excepted and shall provide janitorial and cleaning services for the Premises at Tenant's expense. Without limiting the generality of the foregoing, Tenant shall remove all new graffiti on the Premises within forty-eight (48) hours after such graffiti shall be placed on the Premises and shall promptly repair, in a good and workmanlike manner, any damage to the Premises caused by any act or omission of Tenant, or of any employee, agent or invitee of Tenant, or failing to do so after the expiration of applicable notice and cure periods, Tenant shall pay Landlord for the cost of all such repairs, whereupon Landlord shall cause such repairs to be completed.

7.        PURPOSE. Tenant shall use and occupy the Premises only for the purpose of operating an Arizona Department of Health Services-licensed (or legally-permitted recreational) medical marijuana dispensary or cultivation location and for no other purpose whatsoever. Immediately upon Tenant's or subtenant's receipt of any and all permits and licenses relative to the Premises and the use of the Premises, copies of such permits and licenses shall be delivered to Landlord.

8.        SIGNAGE. Tenant may install and shall maintain at its sole expense, any and all signs upon the interior and exterior of the Premises, subject to the reasonable approval of Landlord and the approval of all local and County governmental agencies that are required to approve said signage.

9.        INSURANCE.

9.1       Tenant agrees to obtain and keep in force during the Term, at Tenant's sole expense, the following insurance:

9.1.1        Public liability insurance to protect against any liability to the public incident to the use of or resulting from any accident occurring in or about the Premises, the liability under such insurance to be not less than $2,000,000.00 for any one person injured or $2,000,000.00 for any one accident and $1,000,000.00 for property damage.

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9.1.2        All insurance policies to be obtained by Tenant hereunder shall insure by name the Landlord, Tenant and any mortgagees, and copies thereof shall be delivered to Landlord upon the Commencement Date. Landlord shall have the right to reasonably disapprove any insurance company proposed by Tenant. Each of the foregoing original policies are to be placed with Landlord who is authorized to deliver such policies to mortgagees when required, and Tenant shall obtain a written obligation on the part of the insurance carriers to notify Landlord in writing thirty (30) days prior to any cancellation thereof, and Tenant agrees, if Tenant does not keep such insurance in full force and effect, Landlord may take out the necessary insurance and pay the premiums and the repayment thereof shall be deemed to be part of and in addition to the rental, and payment thereof shall become due, together with interest on such payment at the rate of one and one-half percent (1.5%) per month (compounded monthly), on the next rental payment date.

9.1.3        Tenant shall furnish Landlord with proof of all such insurance at least annually and at any time upon demand of Landlord.

9.2       Tenant shall obtain and keep in force during the Term casualty insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood, mold and special extended perils ("all risk" as such term is used in the insurance industry) and shall provide a copy of each such policy of insurance before this Lease is executed and continuously thereafter, with each renewal or replacement of insurance. Provided that Tenant fails to obtain the necessary insurance, Landlord may obtain the necessary insurance. In such a case, together with each payment of Rent to Landlord commencing and prorated as of the Commencement Date through the balance of the Term, Tenant shall pay to Landlord one-twelfth (1/12^th) of the premium cost of such casualty insurance. Subject to such payment, Landlord shall pay such premiums to the insurance company. The parties shall co-operate with each other, in order to avoid purchasing coverage on the same item or for the same acts and omissions.

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10.        TERMINATION: In the event that the Landlord is specifically advised in writing by any federal, state or local government that Landlord is subject to seizure of his its property, if it does not terminate Tenant's right to cultivate marijuana upon the Leased Premises, or if the Arizona Medical Marijuana Act (AMMA) is declared to be unenforceable or is modified to prohibit the sale or cultivation of medical marijuana upon the Leased Premises, or if any other zoning regulation, rule or regulation is modified to prohibit sale, cultivation or possession of marijuana upon the Leased Premises, Landlord or may terminate this Lease.

11.        COMPLIANCE WITH LAW; AS IS. Tenant accepts the Premises strictly on an "AS IS" basis, without any representations or warranties from Landlord. Tenant agrees to be compliant with all applicable rules/laws/regulations in effect, or subsequently passed into effect, as of and after the Commencement Date.

Tenant, at its sole cost and expense, shall promptly observe and materially comply with all present and future laws, orders, regulations, rules, ordinances and requirements of any governmental agency with respect to the use, care and control of the Premises. Without limiting the generality of the foregoing, Tenant shall make any structural changes or additions to the Premises that are required, in order to comply with the requirements of its business operations. Landlord makes no representations or warranties to Tenant, and hereby disclaims any and all representations or warranties to Tenant, concerning the Premises, including without limitation, that as of the Commencement Date the Premises are (a) in compliance with all federal, state and local laws, regulations and directives for Tenant's intended use of the Premises, including without limitation the Environmental Laws, but excluding the Americans With Disabilities Act; and (b) free from and of all hazardous materials, including without limitation asbestos, lead paint and polychlorinated biphenyl; provided that Landlord represents and warrants to Tenant that Landlord has no actual knowledge, without having made any investigation or inquiry, of any present violation by the Premises of any of the Environmental Laws. "Environmental Laws" shall include, but not be limited to, the Resource, Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601, et seq.;the Clean Water Act, 33 U.S.C. Section 1251, et seq.; the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 201,300f to j-9 and any and all environmental laws of the State of Arizona and any and all amendments to such Environmental Laws. Tenant agrees to hold harmless Landlord, and hereby waives all rights and claims of contribution against Landlord, with respect to any violations or alleged violations of Environmental Laws or any other federal, state and local laws, regulations and directives concerning the Premises which arise as a result of Tenant's activities at the Premises.

12.        ACCESS BY LANDLORD. Landlord, or its representatives and agents, shall have free access to the Premises at reasonable times for the purposes of inspection and/or for examining or exhibiting the same to prospective purchasers, lenders or tenants; provided that, subject to Section 20 below, Landlord shall give Tenant at least one (1) day's written notice or by email or by phone in advance of such examination or exhibition, unless it would be impracticable to do so due to solely to an emergency concerning the Premises.

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13.        RETURN OF PREMISES. Upon the expiration of the term of this Lease or upon its termination for any cause, except for breach of this Lease by Landlord, Tenant shall restore the Premises to the condition that Tenant received the Premises, reasonable wear and tear excepted, unless Landlord advises Tenant to not remove any structural changes or alterations. If such non-removal shall not cause additional expense to Tenant, Tenant shall not be required to remove them. Tenant shall surrender the Premises in as good order and condition as when received, reasonable wear and tear excepted.

14.        HOURS OF BUSINESS. Tenant shall continuously during the entire term hereof conduct and carry on Tenant's business in the Premises and shall keep the Premises open for business and cause Tenant's business to be conducted therein during the usual business hours of each and every business day as is customary for businesses of like character.

15.        ALTERATIONS AND MODIFICATIONS. All alterations and modifications to the Premises that Tenant may desire shall be done at the expense of Tenant, and shall become the property of Landlord and remain on the Premises (except for Tenant's removable equipment and trade fixtures) and become Landlord's property upon the expiration or earlier termination of the Term; provided that (a) "removable equipment" shall mean equipment that is not permanently bolted, screwed or otherwise affixed to any walls, ceiling or floor of the Premises, and (b) Tenant shall not make any alterations and modifications to the Premises without first obtaining the prior written approval of Landlord, which approval shall not be unreasonably withheld. Any work done at the Premises shall be done by duly licensed and qualified contractors. All damage or injury done to the Premises by Tenant or any person who may be in or on the Premises with the consent of Tenant shall be paid for by Tenant.

16.        LIENS AND ENCUMBRANCES. Tenant shall keep the Premises free and clear of any liens or encumbrances imposed on the Premises by reason of any contract, act or omission of Tenant. Tenant shall have the full right and authority to contest the validity of any such liens or encumbrances, at Tenant's expense, and Landlord shall cooperate with all such contest actions, including without limitation, signing all consents and other documents reasonably requested by Tenant or its agents in connection with such contest actions; provided that Tenant shall not only bear the expense of such contests, but that such contest shall be undertaken at Tenant's risk as to liability for payment of any applicable liens or encumbrances, and of penalties and/or interest imposed on any delinquencies related thereto. Landlord may require, at Landlord's sole option that Tenant shall provide to Landlord, at Tenant's sole cost and expense, a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of any improvements, additions, or alterations, in the Premises which the Tenant desire to make, to insure Landlord against any liability for mechanics' and material men's liens and to insure completion of the work.

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17.        DEFAULTS AND REMEDIES.

17.1      Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant:

17.1.1        The vacating or abandonment of the Premises by Tenant for more than thirty (30) days.

17.1.2        The failure by Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder within three (3) business days after the due date (without any requirement of notice from Landlord, except that notice is required with regard to all items except Rent and normal, monthly rental taxes).

17.1.3        The failure by Tenant to observe or perform any of the covenants, conditions, or provisions of this Lease to be observed or performed by Tenant, other than described in Section 17.1.2, where such failure shall continue for a period of fifteen (10) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than fifteen (10) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said 10-day period and thereafter diligently prosecutes such cure to completion.

17.1.4         (a) The making by Tenant of and general assignment, or general arrangement for the benefit of creditors; (b) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (c) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within sixty (60) days; or (d) the attachment, execution, or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within sixty (60) days.

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17.2       Remedies. In the event of any such uncured default or breach by Tenant, Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord on the exercise of any right or remedy which Landlord may have by reason of such default or breach, enter and/or taking of possession of the Premises without a court order. Landlord may proceed by forcible detainer or by other judicial remedy to obtain possession of the Premises.

17.2.1        Landlord shall not have the immediate right of reentry (with or without notice) and may not remove all persons and property (subject to applicable law) from the Premises without first obtaining a court order allowing Landlord to take possession of the Premises. If Landlord obtains a court order for possession or if Tenant shall abandon the Premises for more than thirty (30) days, all property left on the Premises will be considered abandoned and may be sold, removed, or stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.

17.2.2        Should Landlord elect to re-enter as herein provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may either terminate this Lease or may from time to time, without terminating this Lease, re-let said premises or any part thereof for such term or terms (which may be for a term extending beyond the tem' of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in Landlord's sole discretion may deem advisable with the right to make reasonable alterations and repairs to the Premises.

17.2.3        Upon each such re-letting (a) Tenant shall be immediately liable to pay to Landlord, in addition to any indebtedness other than rent due hereunder, for the reasonable cost and expenses of such re-letting and of such alterations and repairs incurred by Landlord and the amount, if any, by which the rent reserved in this Lease for the period of such re-letting (up to but not beyond the term of this Lease) exceeds the amount agreed to be paid as rent for the Premises for such period on such re-letting, or (b) at the option of Landlord, rents received by such Landlord from such re-letting shall be applied, first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord, second to the payment of any reasonable costs and expenses of such re-letting and of such alterations and repairs, and third to the payment of rent due and unpaid hereunder, and the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If Tenant has been credited with any rent to be received by such re-letting under option (a), and such rent shall not be promptly paid to Landlord by the new tenant, or if such rentals received from such re-letting under option (b) during any month shall be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly.

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17.2.4        No such re-entry or taking possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention be given to Tenant. Notwithstanding any such re-letting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach, unless such previous breach has already been cured by Tenant.

17.2.6        Pursue any other remedy not inconsistent with the foregoing now or hereafter available to Landlord under the laws or judicial decisions of the State of Arizona.

17.2.7        In addition to the foregoing rights and remedies of Landlord, Tenant acknowledges that late payment by Tenant to Landlord of Rent or other sums due hereunder will cause Landlord to incur expenses in an amount that will be impracticable or extremely difficult to ascertain. Accordingly, if any installment of rent or any sum due from Tenant is not received by Landlord when due, Tenant shall pay to Landlord as liquidated damages, a late charge equal to ten percent (10%) of such overdue amount. The parties hereby agree that this late charge represents a fair and reasonable estimate of the cost that Landlord will incur, in addition to interest on the money involved, because of the late payment by Tenant. Landlord's failure to demand the payment of late charges on one or more occasions shall not constitute a waiver of landlord's right to demand payment of past due late charges. Acceptance of late charges by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor shall such acceptance prevent Landlord from exercising any of the other rights and remedies granted hereunder. In addition, because of late payment or any other default by Tenant under this Lease, Landlord may also incur attorney's fees for services whether or not in connection with litigation, and Tenant shall pay the reasonable attorney's fees incurred by Landlord for these services.

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17.3       Default by Landlord. Landlord shall not be in default unless Landlord fails to perform obligations required by Landlord within a reasonable time, but in no event later than thirty (45) days after written notice by Tenant to Landlord specifying wherein Landlord has failed to perform such obligations; provided however, that if the nature of Landlord's obligation is such that more than thirty (45) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such 45-day period and thereafter diligently prosecutes the same to completion. Landlord shall not be deemed in default hereunder as long as Tenant shall be in default hereunder.

17.4       Attorney's Fees. In addition to the provisions of Section 17.2 above in favor of Landlord, the substantially prevailing party in any lawsuit involving the enforcement or interpretation of this Lease shall be entitled to recover from the substantially non-prevailing party the attorney's fees and costs reasonably incurred by the substantially prevailing party.

18.        DESTRUCTION OR CASUALTY. In the event that the Premises are injured, damaged or destroyed by act of God, by fire or other casualty, and Landlord in its sole discretion decides not to repair or restore the Premises, Tenant or Landlord shall have an option to terminate this Lease as of the date of such injury, damage or destruction. This option shall be exercised upon the giving of written notice to Landlord or Tenant, as the case may be, within sixty (60) days following the destruction, injury or damage. In the event that Landlord determines to repair and restore the Premises, Landlord shall so advise Tenant in writing within sixty (60) days following the destruction, injury or damage, and shall proceed with due diligence to effect repairs or reconstruction. During the period of repair or reconstruction, this Lease shall continue in full force and effect; provided, however, that Tenant shall be entitled to a reduction of Rent from the date of such destruction, injury or damage until the repairs or reconstruction are completed in an amount proportionate to the extent to which such damage, injury or destruction and the making of repairs or reconstruction interferes with the occupancy by or business operations of Tenant with respect to the Premises.

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19.        CONDEMNATION. In the event that all or any portion of the Premises shall be taken by eminent domain or condemnation by any governmental or other authority having jurisdiction to do so, Landlord shall be entitled to receive, and Tenant hereby assigns completely to Landlord, all proceeds payable by such authority(ies) in connection with such taking, except that Tenant shall be entitled to recover from such authority(ies) only compensation for relocation expenses to the extent payable by such authority(ies). Tenant shall be entitled to a reduction of rent from the date of such taking in an amount proportionate to the extent to which such taking interferes with the occupancy by or business operations of Tenant with respect to the Premises. In the event that more than ten percent (10%) of exterior portions of the Premises or if any interior portion of any structure on the Premises are taken, Tenant may terminate this Lease, effective as of the date of actual delivery of possession to the condemning authority.

20.        QUIET ENJOYMENT. Tenant, on performing the covenants and observing the conditions of this Lease, at all times during the turn shall have the peaceable enjoyment of the Premises without hindrance or disturbance by Landlord or any person claiming through or under it or any person having or claiming paramount title; provided that during the Term Landlord shall be permitted to store at the Premises, in an area of the Premises mutually agreed upon by Landlord and Tenant prior to the Commencement Date exclusively reserved to and freely accessed by Landlord without prior notice to Tenant, motors and related equipment.

21.        ASSIGNMENT. Landlord may freely sell, assign or otherwise transfer all or any portion of its interest under this Lease or in the Premises or in the building or the land that comprise the Premises, and in the event of any such transfer, the party originally executing this Lease as Landlord, and any successor or affiliate of such party, shall be relieved of any and all of its obligations under this Lease from and after the date of such transfer, provided that Landlord is not in default of this Lease at the time of transfer. Tenant shall thereafter be bound to the transferee with the same effect as though the latter had been the original Landlord hereunder, provided that the transferee assumes and agrees to carry out all the obligations of Landlord hereunder.

No assignment or sublease of the Premises by Tenant shall be binding upon Landlord or confer any rights on the proposed assignee or subtenant without the prior written consent of Landlord, which Landlord may withhold in its sole discretion. Upon any assignment so approved by Landlord, Tenant shall not be relieved of any liability with respect to this Lease. In the event of any approved assignment or sublease by Tenant, Tenant shall pay to Landlord any and all attorney's fees and costs incurred by Landlord in its review and approval of the assignment and/or sublease transaction and in the preparation and/or review of all documents related thereto, up to a total charge of one thousand dollars ($1,000.00).

22.        NOTICES. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Landlord at 16624 N. 90^th Street #101, Scottsdale, Arizona 85260. Any and all notices, consents or other communications provided for herein shall be given in writing and delivered by hand or registered or certified mail addressed to the Tenant at 2095 Northern Avenue, Kingman, Arizona and/or 16624 N. 90^th Street #200, Scottsdale, Arizona 85260, or to such other address as Tenant or Landlord may designate by written notice to the other. Each such notice shall be deemed given on the date it is personally delivered, or if mailed, on the date of mailing.

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23.        PRIOR AGREEMENTS This Lease constitutes the entire agreement between the parties and supersedes and cancels any and all prior agreements between the parties relating to the subject matter hereof.

24.        BENEFITS. This Lease shall bind and inure to the benefit of the parties hereto and their respective administrators, legal representatives, successors and assigns, but neither this Lease nor any right or obligation hereunder shall be assigned by any party except as provided in this Lease.

25.        FURTHER ASSURANCES. The parties hereto shall execute and deliver all such other instruments and take all such other actions as any party may reasonably request from time to time in order to effect the terms and conditions of this Lease. The parties shall cooperate with each other and with their respective counsel and accountants in connection with any actions to be taken as a part of their respective obligations under this Lease.

26.        GOVERNING LAW, DISPUTE RESOLUTION AND VENUE. This Lease shall be construed in accordance with the laws of the State of Arizona. In the event of any dispute, venue shall be the state court located in Maricopa County, Arizona.

In the event a party is in breach of this Agreement and the failure of a party to cure said breach in a timely manner, pursuant to this Agreement, to the other party's satisfaction within the period set forth herein, the other party or parties, in addition to and not in limitation of any other rights and remedies available to such other party or parties at law or in equity, shall have the right to seek injunctive relief and/or the appointment of a receiver.

The forgoing notwithstanding, the parties hereby agree to attempt to resolve all differences among themselves by nonbinding mediation. In the event of a dispute, either party may demand mediation (a settlement conference). If the parties fail to agree upon a mediator within five (5) business days of demand for mediation, either party may petition the Maricopa County Superior Court for the appointment of a mediator. If the dispute is not resolved by agreement of all parties within thirty (30) calendar days of the appointment of a mediator, or within forty-five (45) days after the written request for mediation is transmitted to the other party, either party may commence arbitration. The parties shall split the mediator's fee.

If mediation is not timely commenced or fails, all disputes among the parties to this Agreement shall be settled by binding arbitration, by one arbitrator, according to the Arizona Revised Statutes and the Arizona Rules of Civil Procedure. If the parties cannot unanimously agree upon an arbitrator, any person or entity involved in the dispute may petition the Maricopa County Superior Court for the appointment of an arbitrator. The parties to the arbitration shall split the arbitrator's fees equally. The arbitrator's decision shall be final and binding and may be enforced according to the Uniform Arbitration Act and/or enforced in any court of competent jurisdiction. The arbitrator may award injunctive relief and may award attorney fees and/or costs to the prevailing party or parties.

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27.        WAIVER. No failure or delay on the part of either party in exercising any right, power or privilege under this Lease shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof. The rights and remedies expressly specified in this Lease are cumulative and are not exclusive of any other rights or remedies which either party would otherwise have.

28.        CAPTIONS. All section titles or captions contained in this Lease are for convenience only and shall not be deemed part of this Lease.

29.        SEVERABILITY. The provisions of this Lease are severable and the holding of any one provision as invalid or unenforceable shall have no effect on any other provision.

30.        COUNTERPARTS. This Lease may be executed simultaneously in two (2) or more counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. It shall not be necessary in making proof of this Lease to produce or account for more than one such counterpart.

31.        FOR RENT AND FOR SALE SIGNS. Landlord may post any "for sale" or "for rent" signs on or at the Premises and exhibit the Premises during normal business hours to prospective buyers and tenants, from time to time.

32.        ESTOPPEL CERTIFICATE. Landlord and Tenant shall, at any time and from time to time, within ten (10) business days after written request from the other party, execute, acknowledge and deliver to the requesting party a statement in writing: (a) certifying that the Lease is unmodified and in full force and effect or, if modified, stating the nature of such modification and certifying that the Lease, as so modified, is in full force and effect; (b) certifying the dates to which the Rent and other charges are paid in advance, if any; and (c) acknowledging that there are not, to such party's knowledge, any uncured defaults on the part of the requesting party hereunder, or specifying such defaults if they are claimed. Any such statement may be relied upon by any prospective purchaser or lender of all or any portion of the Premises or any leasehold interest therein. The failure to deliver such statement within such time shall be conclusive and binding upon the party upon whom the request is made 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 on the requesting party's performance; and (iii) no Rent has been paid in advance. If Tenant is required or requested to execute more than one estoppel certificate or similar document in any twelve (12) month period, Landlord shall reimburse Tenant for its legal fees incurred in having such documents reviewed, up to a total charge of five hundred dollars ($500.00).

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33.        COMMISSIONS. Landlord and Tenant acknowledge that neither of them has engaged the services of a real estate broker, salesperson or finder who has provided real estate brokerage services in connection with this transaction, and is entitled to a commission. Landlord and Tenant agree to indemnify and hold each other harmless in connection therewith.

34.        USE AND SUITABILITY OF PREMISES. Tenant acknowledges that neither Landlord nor Landlord's agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant's business, or that Tenant's proposed use of the Premises or its manner of operation are in compliance with applicable laws or governmental regulations. It is the Tenant's sole responsibility to obtain building permits and/or occupancy permits, if required, and to correct code violations or code violations resulting from changed or updated code requirements. Landlord shall not be liable for any delays or costs in obtaining said permits and Tenant shall not withhold rents in the event of any delays or unexpected costs. Landlord and Landlord's agent shall not, under any circumstances, be obligated to investigate or confirm the permissibility, propriety, or legality of Tenant's proposed use. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything within the Premises which will in any way increase the existing rate of or affect any fire or other insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy covering said Building or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other Tenants or occupants of the building or injure or annoy them or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose; nor shall Tenant cause, maintain or permit any nuisance in, or about the Premises. Tenant shall not commit or allow to be committed any waste in or upon the Premises. Tenant shall not use the Premises, or permit anything to be done on or about the Premises, which will in anyway conflict with any law, statue, ordinance or governmental rule or regulation in force or which may hereafter be enacted or promulgated. Tenant shall at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not related to or affected by Tenant's improvements or acts.

35.        SALE OF THE PREMISES BY LANDLORD. In the event of any sale of the Premises and/or the Shopping Center by Landlord, IF ANY, Landlord shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale; and the purchaser, at such sale or any subsequent sale of the Premises shall be deemed without any further agreement between the parties of their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease.

14

36.          HOLD HARMLESS AND INDEMNIFICATION. Notwithstanding any provision to the contrary contained herein:

36.1        Neither Landlord nor any of its agents or employees shall have any liability to Tenant, or to Tenant's employees, agents, contractors, subtenants, invitees, patients or customers for any damage, injury, loss or claims based on or arising out of any cause whatsoever, including, without limitation, the following: repair to any portion of the Premises; interruption in the use of the Premises or any equipment therein; any accident or damage resulting from any use or operation by Landlord, Tenant or any other person or entity of elevators or heating, cooling, electrical, sewerage or plumbing equipment or apparatus; termination of this Lease by reason of damage to the Premises; fire, robbery, theft, vandalism, mysterious disappearance or any other casualty; actions of any other person or entity; failure or inability to furnish any service specified in this Lease; and leakage in any part of the Premises from water, rain, ice or snow that may leak into, or flow from, any part of the Premises, or from drains, pipes or plumbing fixtures in the Premises. Any property placed by Tenant in or about the Premises shall be at the sole risk of Tenant, and Landlord shall not in any manner be responsible therefor. Notwithstanding the foregoing, Landlord shall not be released from liability to Tenant for and to the extent of any injury caused by Landlord's willful misconduct or negligence or the willful misconduct or negligence of any of Landlord's employees, agents, partners contractors, employees, subtenants or invitees, unless Tenant is fully compensated for its loss by insurance proceeds.

36.2        Unless Landlord's losses are recovered by insurance proceeds, Tenant shall reimburse Landlord for, and shall indemnify, protect, defend and hold Landlord, its employees and agents harmless from and against all costs, damages, claims, liabilities, expenses (including attorneys' fees, disbursements and actual costs), losses and court costs suffered by or claimed against Landlord, directly or indirectly, based on or arising out of, in whole or in part, (i) the use and occupancy of the Premises or the business conducted therein by Tenant, its agents, contractors, employees, subtenants or invitees, (ii) any act or omission of Tenant, its agents, contractors, employees, subtenants or invitees; or (iii) any breach of Tenant's obligations under this Lease.

37.        PROHIBITED PERSONS AND TRANSACTIONS. Tenant represents and warrants to Landlord that as of the Commencement Date, Tenant is currently in compliance with, and Tenant further covenants to Landlord that Tenant shall at all times during the term of the Lease (including any extension thereof) remain in compliance with, the regulations of the Office of Foreign Assets Control ("OFAC") of the U.S. Department of Treasury (including those named on OFAC's Specially Designated Nationals and Blocked Persons List) and any statute, executive order (including, but not limited to, Executive Order 13224, dated September 24, 2001 and entitled "Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism"), or other governmental, regulatory, or administrative action relating thereto and the Americans with Disabilities Act ("ADA").

15

IN WITNESS WHEREOF, the parties have set their names effective as of the Commencement Date above set forth.

LANDLORD:

Kingman Property Group, LLC an Arizona limited liability partnership

By
	Its Duly Authorized Agent
By
	Its Duly Authorized Agent
TENANT:
CJK, Inc., an Arizona corporation
By	Its Duly Authorized Agent
By	Its Duly Authorized Agent

16

Addendum to the Lease

Compliance terms for Medical Marijuana Facility

1. Lessee acknowledges that neither the lessor nor lessor's representatives have made any oral or written representations or warranties whatsoever concerning the suitability or zoning of the property with respect to its potential use as a medical marijuana facility, and that it is the sole responsibility of the Lessee to investigate and to satisfy itself concerning the suitability of the property for such use.

2. Lessee understands and agrees that Lessee, and not Lessor, shall be solely responsible at the Lessee's own expense for full compliance with all state and local laws, rules, regulations and ordinances pertaining to the maintenance and/or operation of a medical marijuana cultivation facility.

3. Lessee warrants and represents that it is eligible and qualified to operate a medical marijuana facility in the property under all applicable state and local laws rules, regulations and ordinances, and that Lessee has obtained all legally required licenses, permits, and approvals to do so before commencing operations on the property.

4. Lessee shall indemnify, defend and hold harmless Lessor, its trustees, agents, employees, and lenders from and against all damages, liabilities, judgments, claims, expenses, penalties, and attorney and consultant fees arising out of or connected in any way to Lessee's violation or alleged violation of any federal, state, or local law, rule, regulation or ordinance, whether or not litigation or prosecution is actually commences against Lessor, its trustees, agents, employees or lenders.

5. Lessee shall provide notice to Lessor immediately in the event of the revocation, suspension, expiration, transfer, or surrender of Lessee's lawful authority to operate a medical marijuana facility. Such revocation, suspension, expiration, transfer or surrender, or Lessee's failure to provide immediate notice thereof to Lessor, shall constitute a Breach of the Lease entitling Lessor at its sole discretion to terminate the lease.

LANDLORD:		TENANT:
Kingman Property Group, LLC		CJK, Inc., an Arizona corporation
By		By
	Its Duly Authorized Agent		Its Duly Authorized Agent

 17

EX-10.13

Exhibit 10.13

October 1, 2015

Mr. Bryan McLaren, CEO

Zoned Properties, Inc.

14300 N. Northsight Blvd #208

Scottsdale, AZ 85260

Dear Mr. McLaren:

Thank you for the opportunity to be of continuing service to you. This letter and the accompanying attachments outline the terms of our proposed engagement as we understand them, to be effective on October 1, 2015. Should these terms be acceptable, please indicate your agreement by signing in the space provided at the end of this letter and returning the original to us.

SCOPE OF ENGAGEMENT

We are being engaged to:

● Provide outsourced/part-time chief financial officer/controller services for the company. Adam Wasserman will serve as your Chief Financial Officer.

● Assist the Company and its management in dealing with auditing process and with the auditing firm including helping the Company prepare and finalize the audit in a timely and efficient manner.

● Assemble your annual and quarterly financial statements, which include a balance sheet, statement of operations, statement of stockholders' equity, and a statement of cash flows and footnotes for specific periods in order to conform to generally accepting accounting principles accepting in the United States of America. Additional, we will assist management in the preparation of financial statements and work papers related to annual financial audits and quarterly SEC filings. SEC filings shall include quarterly 10-Q reports, financial portions of the 10-K report and, management's discussion and analysis.

● Summarize such adjusting entries as management deems necessary to reflect non-monetary transactions (e.g., asset contribution, depreciation, capitalization of costs, loan amortization, intercompany transactions, etc.).

● We will assist the Company in preparing other public filings required by the Company including 8-K filings and registration statements on Form S-1.

● Assist you in communications with the Company's Board of Directors including participation at board meetings, and any other board issues

● We will assist the Company in dealing with potential investors. We will be available to answer questions, provide analysis and appearance at any investor meetings.

● We will continually train Company staff and will provide greater oversight and we will advise management about all financial issues related to being a public entity.

● We do NOT render any tax advice nor prepare any tax returns; however we will interface on behalf of the company with whomever you engage to handle such matters.

FINANCIAL TERMS Corporate Office 431 Fairway Drive — Suite 200
Deerfield Beach, Florida 33441 www.cfooncall.com 954.616.5582 800.867.0078 954.337.2204 Main
Toll Free
Fax

Mr. Bryan McLaren October 1, 2015

Our fees for the above services will be billed at the flat rate of $10,000.00 per month which shall be payable as follows:

$4,500.00	Base Fee payable in cash per month
$2,000.00	per month payable in cash to be deferred and paid upon the earlier of 6 months or a capital raise (at such time base fee shall increase to $6,500.00 per month)
$3,500.00	per month to be payable quarterly in advance (minimum 1,250 shares per month). Said stock shall be valued at the lower of the share price from the most recent capital raise or 60% of the bid price of the Company's common stock at the last trading day of the previous quarter.

Upon the execution by all parties client shall issue to CFO Oncall, Inc. 19,600 shares of the Company's common shares (restricted) which shall represent 2,100 shares due through December 31, 2015 and 17,500 shares as a bonus that was determined by the client. In addition, at the Client's sole discretion, Client may elect to make additional stock grants as incentives to CFO Oncall, Inc.

Our Standard Engagement Terms are attached and incorporated herein by reference. Please review these terms carefully. Lack of payment may result in our termination of services until your account is fully paid.

We appreciate your trust and confidence in our professional services. If we can answer any questions regarding this engagement or our fees, or explain any of our other services, please do not hesitate to contact us.

If the foregoing is consistent with your intentions and understanding, please sign this letter in the space provided and return it to us.

Regards,

/s/ Adam Wasserman

Adam Wasserman

CFO Oncall, Inc.

I understand and agree with the provisions outlined above.

/s/ Bryan McLaren	10.26.15
Signature	Date

Print Name: Bryan Mclaren

2

Mr. Bryan McLaren October 1, 2015

STANDARD ENGAGEMENT TERMS

The following terms govern the engagement between the addressee of the accompanying engagement letter (You) and CFO Oncall, Inc. (CFO).

CONFIDENTIALITY

CFO treats all Client relationships as confidential and will not disclose your financial or tax information or any other proprietary information learned during the course of the engagement to anyone outside of CFO without your written permission except as required by law or regulation. Your permission may be granted by identifying the parties (e.g. financial advisor, attorney, banker, etc.) to whom disclosure is permitted below, or by other written correspondence. CFO further agrees to bind its employees and subcontractors to the terms and conditions of this Agreement.

CLIENT PROVIDED INFORMATION

You represent that all information provided to CFO is accurate and complete to the best of your knowledge. Further, if these services involve tax return preparation, you represent that unless CFO is otherwise advised in writing or acts as your business manager, you possess the required supporting documentation for such tax deductions as travel, entertainment, business gifts, charitable contributions, automobile usage, etc. CFO is not responsible for any additional tax, penalties or interest that might result from the lack of documentation for such deductions upon audit.

PROFESSIONAL JUDGMENT

CFO will use its professional judgment in applying tax, accounting, or other rules applicable to this engagement. Wherever there are conflicting, reasonable interpretations of the rules, we will advise you of the possible positions you might take and follow the position you request as long as it is consistent with applicable professional, statutory or regulatory standards. Should the positions taken result in additional taxes, penalties, fines, interest or any other damages, we assume no responsibility for such costs.

CHANCES OR MODIFICATIONS IN SCOPE OF ENGAGEMENT

Should the scope of the engagement change, CFO will prepare a Change Order letter outlining the necessary changes and the modification of fees. CFO will not proceed with the modified scope without your prior approval. Fee increases resulting from Change Orders will be billed at the standard hourly rate. They will be outside the "not to exceed" amount on page 2.

TERMINATION OF ENGAGEMENT

Unless otherwise stated in the accompanying engagement letter, this engagement may be terminated upon thirty (30) days written notice by either party; provided, however, that these Standard Engagement Terms shall survive the termination of this engagement.

WORKPAPER OWNERSHIP

All documents and work papers, including, but not limited to, data in electronic form, which emanate from the services performed by CFO remain the property of CFO. Upon termination of this engagement CFO will provide you with a complete copy for your records of all documents, and work papers prepared as part of this engagement. CFO retains its work papers at its discretion and does not retain superseded materials.

GOVERNING LAW

The terms of this Agreement shall be construed in accordance with the laws of the State of Florida (regardless of the laws that might be applicable under principles of conflicts of law) as to all matters including, but not limited to, matters of validity, construction, effect and performance. If it becomes necessary for any party to institute legal action to enforce the terms and conditions of this Agreement, and such legal action results in a final judgement in favor of such party ("Prevailing Party"), then the party or parties against whom said final judgment is obtained shall reimburse the Prevailing Party for all direct, indirect or incidental expenses incurred, including, but not limited to, all attorney's fees, court costs and other expenses incurred throughout all negotiations, trials or appeals undertaken in order to enforce the Prevailing Party's rights hereunder. Any suit, action or proceeding with respect to this Agreement shall be brought in the state or federal courts located in Broward County in the State of Florida. The parties hereto hereby accept the exclusive jurisdiction and venue of those courts for the purpose of any such suit, action or proceeding. The parties hereto hereby irrevocably waive, to the fullest extent permitted by law, any objection that any of them may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any judgment entered by any court in respect thereof brought in Broward County, Florida, and hereby further irrevocably waive any claim that any suit, action or proceeding brought in Broward County, Florida, has been brought in an inconvenient forum.

ORIGINAL CLIENT RECORDS

Unless otherwise noted in the accompanying engagement letter, you are responsible to retain original documents as may be necessary to justify reported revenues, expenses, etc. CFO may choose to retain selected copies of documents in its work papers.

LIMITATIONS ON SCOPE OF ENGAGEMENT AND VERIFICATION OF INFORMATION

Unless otherwise stated in the accompanying engagement letter, CFO will not audit or otherwise verify the information provided by you or third parties. This engagement cannot be relied upon to disclose errors and irregularities, including fraud or misappropriation of assets that may exist. However, CFO will inform you of irregularities that come to its attention, unless they are inconsequential.

INDEMNIFICATION FOR MANAGEMENT MISREPRESENTATION

If we incur legal fees as a result of our reliance on any knowingly false representation by you, you agree to reimburse us for all of our legal fees and related costs of defense.

3 

EX-10.14

Exhibit 10.14

PROMISSORY NOTE

$2,100,000.00 Phoenix, Arizona
March 7, 2014

FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the order of Investment Property Exchange Services, Inc., a California corporation, its successors or assigns ("Holder"), the principal sum of TWO MILLION ONE HUNDRED THOUSAND and NOM 00ths DOLLARS ($2,100,000.00) with interest thereon at the rate of seven and one-half percent (7.5%) from the date of this Promissory Note as follows: Interest-only payments commencing on the 7th day of April, 2014, and continuing on the 7th day of each month thereafter until paid. The entire unpaid principal balance, all accrued interest and any other amount payable hereunder shall be all due and payable on March 7, 2019 (the "Maturity Date").

All payments of principal, interest or other amounts due under this Note are payable in lawful money of the United States of America to Holder at Attn: Paula Ripp, 60 E. Rio Salado Parkway, Suite, 1103, Tempe, AZ 85281, or such other place as the Holder may designate in writing. All payments shall be applied first to interest and thereafter to principal, in accordance with the amortization schedule attached hereto.

All interest hereunder shall be calculated on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months; provided, however, that all interest payable for less than a full calendar month shall be calculated for the actual number of days principal is outstanding.

This Note is secured by, among other things, a Deed of Trust and Security Agreement with Assignment of Rents (the "Deed of Trust") of even date herewith and recorded in the Records of Maricopa County, Arizona.

Time is of the essence for payment of this Note. In the event that any payment required under this Note, or the Deed of Trust, is not made within ten (10) days after the date due (regardless of mail delay), a late charge equal to Five Percent (5%) of the amount overdue shall become immediately due and payable for the purpose of defraying the expenses incident to handling such delinquent payments. Such late charge represents the reasonable estimate of Holder and Maker of fair compensation for the loss that will be sustained by Holder due to the failure of Maker to make timely payments. Such late charge shall be paid without prejudice to the right of Holder to collect any other amounts provided or agreed to be paid or to declare a default hereunder or under the Deed of Trust or any instrument securing this Note. Such late charge shall not be applicable to the final payment due under this Note on the Maturity Date.

Promissory Note
Page 1

Upon the failure by Maker to make any installment payment within twenty (20) days of the due date, or in the event Maker fails to make timely payments (within five (5) days of the due date) more than twice in any Loan Year, or in the event of any uncured default under the Deed of Trust, Assignment of Leases, or any other instrument securing this Note, then the entire unpaid principal balance, shall at once or at any time thereafter during continuance of any such default, at the option of Holder, become due and payable. Failure to exercise such option shall not constitute a waiver of the right to exercise the same upon the occurrence of any subsequent such event of default or continuance of such default after demand for strict performance. Acceptance by Holder of any payment in an amount less than the amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an event of default.

Upon the failure by Maker to make any installment payment under this Note within twenty (20) days of the due date, the failure to make any other payment required under this Note, when due, or the occurrence of a default under the Deed of Trust, or any other instrument securing this Note which is not cured within any applicable cure period, then the entire unpaid principal balance shall then accrue interest at the rate of Fifteen Percent (15%) per annum (the "Default Interest Rate") until such default is cured, at which time the normal rate of interest shall then accrue. At such time as a judgment is obtained for any amounts owing under this Note or any document or instrument securing this Note, interest shall continue to accrue on the amount of judgment at the Default Interest Rate.

In the event this Note is placed in the hands of an attorney for collection, or if Holder becomes party plaintiff or defendant in any legal proceeding in relation to the trust property or the lien created by the Deed of Trust or any other instrument securing this Note, or for the recovery or protection of said property or indebtedness, the Maker hereof and Maker's successors and assigns will pay to the Holder, all costs and expenses incurred by Holder, including attorneys' fees, appraisal fees, and reasonable travel expenses, together with interest at the Default Interest Rate from the date they are incurred.

In the event the Holder of this Note finds it necessary to pay real or personal property taxes, assessments, insurance payments, or any other charges, fees, or payments as described in and permitted under the Deed of Trust, or any other document which secures the payment of the indebtedness evidenced by this Note, then such sums shall immediately be added to this Note as additional principal and shall accrue interest at the Default Interest Rate from the date of payment by Holder. Such sums shall be due and owing in full from Maker to Holder ten (10) days after Holder has given notice of payment thereof to Maker.

Promissory Note
Page 2

All fees, costs, expenses, late charges, default interest or other contractual obligations (the "additional sums") paid by Maker to Holder, whether pursuant to the Note, the Deed of Trust, or any other document evidencing or securing the loan or indebtedness, which, under the laws of the State of Arizona may be deemed to be interest with respect to such loan or indebtedness, shall, for the purpose of any laws of the State of Arizona which may limit the maximum rate of interest to be charged with respect to such loan or indebtedness, be payable by Maker as, and shall be deemed to be, additional interest, and for such purposes only, the agreed upon and contracted rate of interest described above shall be deemed to be increased by the additional sum. Maker understands and believes that this lending transaction complies with the usury laws of Arizona; however, if any interest or other charges are ever deemed to exceed the maximum amount permitted by law, then: (a) the amount of interest or charges payable hereunder by Maker shall be reduced to the maximum amount permitted bylaw; and (b) any excess amount permitted by law will be credited against the unpaid principal indebtedness. If the principal indebtedness has already been paid, the excess amount paid will be refunded to Maker.

Maker does not waive diligence, demand, presentment for payment, protest and notice of non-payment and of protest, notice of default, notice of acceleration, and all other notices or demands of any kind, except as otherwise provided for in this Note or the Deed of Trust, Assignment of Leases, or any other instrument securing this Note.

The loan evidenced by this Note is made in the State of Arizona and the provisions hereof will be construed in accordance with the laws of the State of Arizona. Further, in the event of default, this Note may be enforced in any court of competent jurisdiction in the State of Arizona.

Failure of the Holder to exercise any option hereunder shall not constitute a waiver of the right to exercise the same in the event of any subsequent default or in the event of the continuation of any existing default.

Should any one or more provisions of this Note be determined to be illegal or unenforceable, such provision or provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable, and all other provisions shall be effective.

Any notice required or permitted under this Note shall be deemed given upon the earlier of actual receipt or three (3) days after mailing same by registered or certified mail, postage prepaid, return receipt requested, to Maker at 16624 N. 90^th Street, Suite 101, Scottsdale, Arizona 85260, or to Holder at attn: Paula Ripp, 60 E. Rio Salado Parkway, Suite 1103, Tempe, AZ 85281, or to such other addresses either may request by written electronic notice, or one (1) day following pickup by a nationally recognized overnight delivery service.

The terms of this Note apply to, inure to the benefit of, and bind all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns; and if any third party shall become the holder of this Note, such party shall have and possess all rights hereunder to the extent as if this Note had been originally delivered to such third party holder.

“Maker"	ZONED PROPERTIES, INC.
	a Nevada corporation
	By:	/s/ Marc Brannigan
		Marc Brannigan
		Its: President

Promissory Note

Page 3

EX-10.15

Exhibit 10.15 

Date: May 6, 2015

Bryan McLaren, President
Zoned Properties, Inc.

14300 N. Northsight Blvd., Suite 208

Scottsdale, Arizona 85260

Re: Consulting Services Agreement

Dear Mr. McLaren:

Please allow this letter to serve as an expression of our interest in establishing an advisory/consulting relationship between Newbridge Financial, Inc., a Florida corporation (“Advisor”) and Zoned Properties, Inc., a Nevada corporation (the “Company”), to provide business advisory and related consulting services to the Company. This letter sets forth the terms of such a relationship (the “Agreement”).

1. Scope of Engagement. Advisor will assist the Company and provide services in the following areas (the “Services”):

a. Study and review the business, operations, financial performance and development initiatives to provide advice to the Company;

b. Assist the Company in preparing for and completing a capital raise transaction including by referral to placement agents and institutional investors;

c. Assist the Company in attempting to formulate the optimal strategy to meet the Company’s working capital and resource needs;

d. Identify, make introductions to and evaluate potential business contacts within the industry that may help the company advance its business opportunities, and in appropriate instances, negotiate on the company’s behalf;

e. Help assist the Company in structuring a placement agent agreement with broker/dealers or other sources of debt and/or equity financing;

f. Help assist the Company in formulating the terms and structure of any debt or equity financings contemplated by the Company;

g. Assist in any presentation to the Board of Directors of the Company in connection with a proposed transaction or financing; and

Zoned Properties, Inc.
Page 2

h. Identify and introduce the Company to prospective private institutional financial investors, private lender and/or other sources of capital.

2. Term and Termination.

a. Term. The term of our engagement hereunder shall be for a period of thirty-six (36) months commencing on the date hereof (“Engagement Period”). During the term of this agreement, the Advisor and the Company will both have the right to terminate (the “Termination”) the Consulting agreement by providing fifteen (15) days prior written notice to each other. The Termination of this agreement will not, affect the rights of the Consultant to compensation for work completed as of the date of the Termination. The term may be extended by mutual agreement of the parties and may be terminated by either party upon ninety (90) days written notice.

b. Termination. Advisor may terminate this Agreement at any time by providing Company thirty (30) days prior written notice, it being understood by the Parties that at the time of such termination, all amounts due hereunder up to the date of termination shall be paid in full by Company to Advisor. Company may terminate this Agreement only for Advisor’s breach of a material term or condition of this Agreement if Advisor does not cure the breach or commence to cure such breach within thirty (30) days after receiving written notice from Company describing the material breach. In the event of termination of this Agreement by Company or Advisor pursuant to the terms and conditions set forth in this Section 2(b), Advisor shall return to Company any unearned Consulting Fees as of the date of termination. In no event shall the Party exercising its right under this Section 2(b) be precluded by the exercise of such termination right from pursuing, subject to the terms of this Agreement and applicable law, any cause of action or other claim it may then or at any time thereafter have against the other Party in respect of any breach or default by the other Party hereunder. From and after termination of this Agreement, the Parties shall continue to be bound by such provisions of this Agreement as by their nature survive such events, including, without limitation, Sections 5, 10 and 14.

3. Compensation.

a. Services. In consideration of the Services to be provided by Advisor to the Company under this Agreement, the Advisor shall be granted 1,000,000 shares (the “Common Stock” or “Shares”) from the Company’s 2014 Employee Stock Option Plan (“Plan”) in accordance with the Company’s Stock Option Grant Notice and Agreement attached hereto as Exhibit A. All shares of Common Stock issued to Advisor in accordance with this Agreement will have “piggy-back” registration rights along with any registration statement filed by the Company during the term of this Agreement other than a registration statement on Form S-8 or Form S-4. All shares and rights to receive shares in accordance with this Agreement may be assigned and issued in accordance with the instructions of Advisor provided that such share recipients are officers, directors, consultants, employees, advisors, or affiliates of Advisor or Advisor’s subsidiaries.

Zoned Properties, Inc.
Page 3

b. Expenses. All costs and expenses necessary in connection with the Services and travel and living expenses, copying and shipping expenses and other costs and expenses incurred in connection therewith shall be paid by the Advisor.

4. Information. In order to allow Advisor to provide the Services hereunder, Company will cooperate with Advisor and furnish Advisor upon request with all information regarding the business, operations, properties, financial condition, management and prospects of Company (all such information so furnished being the “Information”) which Advisor deems appropriate and will provide Advisor with access to Company's officers, directors, employees, independent accountants and legal counsel. Company recognizes and confirms that Advisor: (i) will use and rely primarily on the Information and on information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same; and (ii) does not assume responsibility for the accuracy or completeness of the Information and any reports or other filings made by Company with the SEC.

5. Indemnification. Company agrees to indemnify and hold the Advisor and its subsidiaries and their respective officers, directors, employees and agents and (collectively, the “Advisor Indemnitees”) harmless from all Advisor Indemnified Liabilities. For this purpose, “Advisor Indemnified Liabilities” shall mean all suits, proceedings, claims, expenses, losses, costs, liabilities, judgments, deficiencies, assessments, actions, investigations, penalties, fines, settlements, interest and damages (including reasonable attorneys’ fees and expenses), whether suit is instituted or not and, if instituted, whether at any trial or appellate level, and whether raised by the parties hereto or a third party, incurred or suffered by the Advisor Indemnitees or any of them arising from, in connection with or as a result of Advisor’s negligence in performance or non-performance of the Services set forth in this Agreement and a breach of any of Company’s representations under this Agreement; provided, however, Advisor Indemnified Liabilities shall specifically exclude the gross negligence, willful misconduct or other unlawful acts of Advisor in connection with its performance of the Services.

6. Independent Agreement. It is understood that this Agreement is independent of and separate from any agreements that may be entered into between the Company with Newbridge Securities Corporation (“NSC”), and that any such future agreement with NSC, if any, will be subject to separate terms and conditions including compensation arrangements and due diligence conditions. In addition, during the course of this Agreement, it is anticipated that the Company may, at its sole discretion, enter into one or more corporate finance transactions with financing sources introduced by Advisor.

Zoned Properties, Inc.

Page 4

7. Non-Circumvention. The Company irrevocably agree not to circumvent, avoid or by-pass Advisor, either directly or indirectly, nor to contact the clients, partners, vendors, strategic alliance partners, private or public equity providers, nor to avoid payment of fees, in a corporation, trust partnership, or any other entity, either in connection with this Agreement or any other additions, renewals, extensions, rollovers, amendments, re-assignments, or otherwise relating to this Agreement. The Parties specifically acknowledge that as entrepreneurial business people, the form of a benefit or business arrangement arising from this Agreement may take many different structures and that it is the overall intent of this Agreement that Advisor be compensated for benefits derived from the services of Advisor. In such regard, this Agreement should be interpreted broadly and all encompassing.

8. Representations and Warranties of the Company. The Company hereby represents and warrants that any and all information supplied hereunder to Advisor in connection with any and all services to be performed hereunder by Advisor for and on behalf of the Company shall be, to the best of the Company’s knowledge, true, complete and correct as of the date of such dissemination and shall not fail to state a material fact necessary to make any of such information not misleading. The Company hereby acknowledges that the ability of Advisor to adequately provide services as described herein is dependent upon the prompt dissemination of accurate, correct and complete information to Advisor. The Company further represents and warrants hereunder that this Agreement and the transactions contemplated hereunder have been duly and validly authorized by all requisite corporate action; that the Company has the full right, power and capacity to execute, deliver and perform its obligations hereunder; and that this Agreement, upon execution and delivery of the same by the Company, will represent the valid and binding obligation of the Company enforceable in accordance with its terms. The representations and warranties set forth herein shall survive the termination or expiration of this Agreement.

9. Representations and Warranties of Advisor. The parties further agree that the Advisor shall not have the authority to enter into any contract and/or agreement and/or to otherwise bind the Company in any way to any third party. Advisor hereby warrant and represent that he/she have the right to perform the serviced contemplated hereby and to disclose to the Company all information transmitted to potential investors in performance of these services. The representations and warranties set forth herein shall survive the termination or expiration of this Agreement.

Zoned Properties, Inc.
Page 5

10. Confidentiality. The Advisor acknowledges that during the engagement it will have access to and become acquainted with various client information, Company records and specifications owned or licensed by the Company and/or used by the Company in connection with the operation of its business including, without limitation, the Company’s business and product processes, methods, customer lists, accounts and procedures. The Advisor agrees that it will not directly disclose any of the aforesaid or use any of them in any manner, either during the term of this Agreement or at any time thereafter, except as required in the course of this engagement with the Company and with the Company’s express written permission. The confidentiality obligations under this Agreement shall not apply to any portion of the Confidential Information which: (a) at the time of disclosure to the party or thereafter is generally available to and known by the public (other than as a result of a disclosure directly or indirectly by a party in violation of this Agreement); (b) was available to the party on a non-confidential basis from a source other than the other party, provided that such source is not and was not bound by a confidentiality agreement with a party; (c) has been independently acquired or developed by a party without violating any of its obligations under this Agreement; or (d) the disclosure of which is legally compelled (whether by deposition, interrogatory, request for documents, subpoena, civil or administrative investigative demand or other similar process). In the event that a party becomes legally compelled to disclose any of the Confidential Information, each party shall provide the other party with prompt prior written notice of such requirement so that the other party may seek a protective order or other appropriate remedy and/or waive compliance with the terms of this Agreement.

11. Independent Contractor. This Agreement shall not render the Advisor an employee, partner, agent of, or joint venture with the Company for any purpose. The Advisor is and will remain an independent contractor in its relationship to the Company. The Company shall not be responsible for withholding taxes with respect to the Advisor’ compensation hereunder. The Advisor shall have no claim against the Company hereunder or otherwise for vacation pay, sick leave, retirement benefits, social security, worker’s compensation, health or disability benefits, unemployment insurance benefits, or employee benefits of any kind.

12. Amendment. No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is evidenced by a written instrument, executed by the party against which such modification, waiver, amendment, discharge, or change is sought.

13. Notices. All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person or transmitted by facsimile transmission or on the third calendar day after being mailed by United States registered or certified mail, return receipt requested, postage prepaid, to the addresses herein above first mentioned or to such other address as any party hereto shall designate to the other for such purpose.

14. Attorneys Fees and Costs. If any party to this Agreement brings an action, directly or indirectly based upon this Agreement or the matters contemplated hereby against the other party, the prevailing party shall be entitled to recover, in addition to any other appropriate amounts, its reasonable costs and expenses in connection with such proceeding, including, but not limited to, reasonable attorneys’ fees and expenses and court costs.

Zoned Properties, Inc.
Page 6

15. Assignment and Subcontractors. This Agreement shall be assignable by Advisor. Company acknowledges that from time to time, Advisor may enlist a subcontractor to perform some of the Services provided to Company. In the event services to be performed as outlined in this Agreement are subcontracted to a third party, the third party shall accept responsibility for the performance of such activities. Advisor will cease to bear any responsibility related to the performance of subcontracted services; however the Advisor will act as liaison between the subcontractor and Company, to monitor the performance of services to be provided by any third party.

16. Securities Laws. Advisor hereby represents that the Shares that are issuable pursuant to this Agreement are not registered under the Securities Act of 1933, as amended (the “Securities Act”) and are being acquired by Advisor for investment and not for sale or with a view to distribution thereof. Advisor acknowledges and agrees that any sale or distribution of the Shares may be made only pursuant to either (a) a registration statement on an appropriate form under the Securities Act, which registration statement has become effective and is current with regard to the shares being sold, or (b) a specific exemption from the registration requirements of the Securities Act that is confirmed in a favorable written opinion of counsel, in form and substance satisfactory to counsel for the Company, prior to any such sale or distribution. Advisor hereby consents to such action as the Company deems necessary or appropriate from time to time to prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act or to implement the provisions of this Agreement, including but not limited to placing restrictive legends on certificates evidencing shares of Shares (whether or not the restrictions applicable thereto have lapsed) and delivering stop transfer instructions to the Company's stock transfer agent.

If these terms are consistent and acceptable with your view of the terms of our relationship, please countersign a copy of this letter and return it via fax and/or email. Please contact me if you have any questions.

Sincerely,

Newbridge Financial, Inc.

/s/ Guy S. Amico

Guy S. Amico (May 6, 2015)

Executive Chairman

AGREED TO AND ACKNOWLEDGED this May 6, 2015

Zoned Properties, Inc.
By:	Bryan McLaren
	Bryan McLaren (May 6, 2015)
	Bryan McLaren, President

Zoned Properties, Inc.
Page 7

EXHIBIT A

ZONED PROPERTIES, INC.

STOCK OPTION GRANT NOTICE AND AGREEMENT

EX-10.16

Exhibit 10.16 

ZONED PROPERTIES, INC.

STOCK OPTION GRANT NOTICE AND AGREEMENT

Zoned Properties, Inc., a Nevada Corporation (the “Company”), pursuant to its 2014 Employee Stock Option Plan (the “Plan”), a copy of which is attached hereto as Exhibit A, hereby grants to the holder listed below (“Participant”), an option to purchase the number of shares of the Company’s common stock, par value $0.001 (“Stock), set forth below (the “Option”). The Option is subject to all of the terms and conditions set forth herein and is the Stock Option Agreement attached hereto as Exhibit B (the “Stock Option Agreement) and the Plan, and may be exercised by the Participant by its completion and delivery to the Company of the Exercise Notice, the form of which is attached hereto as Exhibit C (the “Exercise Notice”), all of which, along with Exhibit D referenced below, are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement.

Participant: Newbridge Financial, Inc.

Grant Date: May 6, 2015

Exercise Price per Share: $1.00

Total Exercise Price: $1,000,000

Total Number of Shares: 1,000,000

Subject to the Option:

Expiration Date:

Type of Option:	_X_Incentive Stock Option ___Non-Qualified Stock Option
Vesting Schedule:	This Option shall vest and become exercisable for the shares of Stock as set forth on the vesting schedule attached hereto as Exhibit D. In no event; however, shall this Option vest and become exercisable for any additional shares of Stock after Participant’s termination of employment (“Termination of Employment”), termination of directorship (“Termination of Directorship”) or termination of consultancy (“Termination of Consultancy”), as applicable.
	[This space intentionally blank. Signature page follows.]

 

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By the signature of Participant hereupon, Participant agrees to be bound by the terms and conditions of the Plan, the Stock Option Agreement and this Grant Notice. Participant has reviewed the Stock Option Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Stock Option Agreement and the Plan. Participant hereby agrees to accept as binging, conclusion and final all decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan or relation to the Option.

Zoned Properties, Inc.
By:	/s/ Bryan McLaren
	Bryan McLaren (May 6, 2015)
Name:	Bryan McLaren
Title:	President & CEO
Date:	May 6, 2015

Participant:
By:	/s/ Guy S. Amico
	Guy S. Amico (May 6, 2015)
Name:	Newbridge Financial, Inc.
Title:	Executive Chairman
Date:	May 6, 2015

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Exhibit A

Zoned Properties, Inc. 2014 Employee Stock Option Plan

 

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Exhibit B

Stock Option Agreement

Pursuant to the Stock Option Grant Notice and Agreement (the “Grant Notice”) to which this Stock Option Agreement (this “Agreement”) is attached, Zoned Properties, Inc., a Nevada Corporation (the “Company”), has granted to Participant an option under the Company’s 2014 Employee Stock Option Plan (the “Plan”) to purchase the number of shares of Stock indicated in the Grant Notice. 

Article I

General

1.1.          Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.

1.2.          Incorporation of Terms Plan. The Option is subject to he terms and conditions of the Plan which are incorporated herein by reference.

Article II

Grant of Option

2.1.          Grant of Option. In consideration of Participant’s past and/or continued employment with or service to the Company or a Parent or Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants to the Participant the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in the Plan and this Agreement. Unless designated as a Non-Qualified Stock Option in the Grant Notice, the Option shall be an Inventive Stock Option to the maximum extent permitted by law.

2.2.          Exercise Price. The exercise price of the shares of Stock subject to the Option shall be as set forth in the Grant Notice, without commission or other charge. Notwithstanding the foregoing, if this Option is designated as an Incentive Stock Option and Participant owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (with with the meaning of Section 424 of the Code), the exercise price per share of Stock subject to he Option shall no t be less than 100% of the Fair Market Value of the share of Stock on the Grant Date.

2.3.          Consideration to the Company, No Employment Rights. In consideration of the grant of the Option by the Company, Participant agrees to render faithful and efficient services to the Company or a Parent or Subsidiary. Nothing in the Plan or this Agreement shall confer upon Participant any right to continue in the employ or service of the Company or any Parent or Subsidiary shall interfere with or restrict in any way the rights of the Company and its Parents and Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company and Participant.

 

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Article III

Period of Exercisability

3.1.          Commencement of Exercisability.

(a)         Subject to Sections 3.3, 5.8, and 5.10, the Option shall become vested and exercisable in such amounts and at such times as are set forth in the Grant Notice.

(b)         No portion of the Option which as not become vested and exercisable at the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy shall thereafter become vested and exercisable, except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and Participant.

3.2.          Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice are cumulative. Each such installment, which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes exercisable under Section 3.3.

3.3.          Expiration of Option. The Option may not be exercised to any extent by another after the first to occur of the following events:

(a)         The expiration of ten years from the Grant Date;

(b)         If this Option is designation as an Incentive Stock Option and Participant owned (within the meaning of Section 424(d) of Code), at the time the Option was granted, more than 10% of the total combined voting power of all classes of stock o the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the expiration of five years from the Grant Date;

(c)         The expiration of the three months following the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy, unless such termination occurs by reason of Participant’s death or Disability or Participant’s discharge for Cause;

(d)         The expiration of one year following the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy by reason of Participant’s death or Disability; or

(e)         The date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy by the Company or any Parent or Subsidiary by reason of Participant’s discharge for Cause. Participant acknowledges that an Incentive Stock Option exercise more than three months after Participant’s Termination of Employment, other than by reason of death of Disability, will be taxed as a Non-Qualified Stock Option.

 

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3.4           Special Tax Consequences. Participant acknowledges that, to the extent that the aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Incentive Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Inventive Stock Options, including the Option, are exercisable for the first time by Participant in any calendar year exceeds $100,000, the Option and such other options shall be Non-Qualified Stock Options to the extent necessary to company with the limitations imposed by Section 422(d) of the Code. Participant further acknowledges that the rule set forth in the preceding sentence shall be applied by taking the Option and other “incentive stock options” into account in the order in which they were granted, as determined under Section 422(d) of the Code and the Treasury Regulations thereunder.

Article IV

Exercise of Option

4.1.          Person Eligible to Exercise. Except as provided in Sections 5.2(b) and 5.2(c), during the lifetime of Participant, only Participant may exercise the Option or any portion thereof. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution. 

4.2.          Partial Exercise. Any exercisable portion of the Option or the entire Option, if when wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3.

4.3.          Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of the Company or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3.

(a)         An exercise Notice in writing signed by Participant or any other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator. Such notice shall be substantially in the form attached as Exhibit C to the Grant Notice (or such other form as is prescribed by the Administrator);

(b)         The receipt by the Company of full payment for the shares with respect to which the Option or portion thereof is exercised, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under section 4.4;

 

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(c)         A bona fide written representation and agreement, in such form as is prescribed by the Administrator, signed by Participant or the other person then entitled to exercise such Option or portion thereof, statin that the shares of Stock are being acquired for Participant’s own account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulation thereunder rand any other applicable law, and the Participant or other person then entitled to exercise such Option or portion thereof will indemnify the company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above. The Administrator may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Securities Act and any other federal or state securities laws or regulations and any other applicable law. Without limiting the generality of the foregoing, the Administrator may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing Stock issued on exercise of the Option shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act, and such registration is then effective in respect of such shares; and

(d)         In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than Participant, appropriate proof of the right of such person or persons to exercise the Option.

4.4.          Method of Payment. Payment of the exercise price shall be by any of the following, or a combination thereof, at the election of the Participant.

(a)         cash;

(b)         check;

(c)         To the extent permitted under applicable lawyers, delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate exercise price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale;

(d)         With the consent of the Administrator, such payment may be made, in whole or in part, through the surrender of shares of Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof;

(e)         With the consent of the Administrator, such payment may be made, in whole or in part, through the surrender of shares of Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof;

 

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(f)          With the consent the Administrator, any combination of the consideration provided in the foregoing paragraphs (a), (b), (c), (d), and (e).

4.5.          Conditions to Issuance of Stock Certificates. The shares of Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares, which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any shares of Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all the following conditions:

(a)         The admission f such shares to listing on all stock exchanges on which such Stock is then listed

(b)         The completion of any registration or other qualifications of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;

(c)         The obtaining of any approval or other clearance from any state or federal government agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;

(d)         The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 4.4; and

(e)         The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience.

4.6.          Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless an until such shares shall have been issued by the Company to such holder (As evidenced by the appropriate entry on the book of the Company or of a duly authorized transfer agent of the Company). No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares are issued, except as provided in Section 12.3 of the Plan.

Article V

Other Provisions

5.1.          Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Participant, the Company and all other interested persons. No member of the Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to eh Plan, this Agreement or the Option. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Administration under the Plan and this Agreement.

 

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5.2           Option Not Transferable.

(a)         Subject to Section 5.2(b), the Option may not be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares underlying the Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts, contracts, or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

(b)         Notwithstanding any other provision in this Agreement, with the consent of the Administrator and to the extent the Option is not intended to qualify as an Incentive Stock Option, the Option may be transferred to one of more Permitted Transferees subject to the terms and conditions set forth in Section 12.1(b) of the Plan.

(c)         Unless transferred to a Permitted Transferee in accordance with Section 5.2(b), during the lifetime of the Participant, only Participant may exercise the Option or any portion thereof. Subject to such conditions and procedures as the Administrator may require, a Permitted Transferee may exercise the Option or any portion thereof during Participant’s lifetime. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3., be exercised by Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

5.3.          Restrictive Legends and Stop-Transfer Orders.

(a)         The share certificate or certificates evidencing the shares of Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws.

(b)         Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)         The Company shall not be required: (i) to transfer on its books any shares of Stock that have been sold or otherwise transferred in violation of any of the provision of this Agreement, or (ii) to treat as owner of such shares of Stock or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such shares shall have been so transferred.

 

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5.4.          Shares to be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this Agreement.

5.5.          Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the address given beneath the signature of the Company’s authorized officer on the Grant Notice, and any notice to be given to Participant shall be addressed to Participant at the address given beneath Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.5, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to Participant shall, if Participant is then deceased, be given to the person entitled to exercise his or her Option pursuant to Section 4.1 by written notice until this Section 5.5. Any notice shall be deemed duly given when sent via email or when sent certified mail 9returen receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

5.6           Stockholder Approval. The Plan will be submitted for approval by the Company’s stockholders within twelve months after the date the Plan was initially adopted by the Board. The Option may not be exercised to any extent by anyone prior to the time when the Plan is approved by the stockholders, and if such approval has not been obtained by the d of said twelve month period, the Option shall thereupon be cancelled and become null and void.

5.8           Governing Law, Severability. This Agreement shall be administered, interpreted, and enforced un the laws of the State of Nevada, without regard to the conflicts of law principles thereof. Should any provision o this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

5.9           Conformity to Securities Law. Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rule, and regulations. TO the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

5.10         Amendments. This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by participant or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company.

5.11         Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth in Section 5.2, this Agreement shall be binding upon Participant and his or her heirs, executors, administrations, successors, and assigns.

 

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5.12         Notification of Disposition. If this Option is designate as an Incentive Stock Option, Participant shall give prompt notice to the Company of any disposition or other transfer of any shares of Stock acquired under this Agreement if such disposition or transfer is made (a) within two years from the Grant Date with respect to such shares or (b) within one year after the transfer of such shares to him or her. Such notice shall specify the date of such disposition or other transfer and the amount realized, in chase, other property, assumption of indebtedness or other consideration, by Participant such disposition or other transfer.

5.13         Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under section 16 of the Exchange Act (including any amendment to Rule 16b-3 of Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

5.14.        Entire Agreement. The Plan and this Agreement (including all Exhibits hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

 

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Exhibit B

Stock Option Exercise Notice

Effective as of today, _______________, the undersigned (“Participant”) hereby elects to exercise Participant’s option to purchase the number of shares of common stock specified below (the “Shares”) of Zoned Properties, Inc., a Nevada Corporation (the “Company”), under and pursuant to the Zoned Properties, Inc. 2014 Employee Stock Option Plan (the “Plan”) and the Stock Option Grant Notice and Stock Option Agreement dates as of (the “Option Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Plan and if not defining in the Plan, the Option Agreement.

Grant Date:  ___________________

Number of Shares to be Exercised:  ___________________

Exercise Price per Share: $1.00

Total Exercise Price:  ___________________

Certificate to be issued in name of:  ___________________

Payment Delivered herewith:  ___________________

Form of Payment:____________

Type of Option:    ___ Incentive Stock Option    ___ Non-Qualified Stock Option

Participant acknowledges that Participant has receive, read and understood the Plan and the Option Agreement. Participant agrees to abide by and be bound by their terms and conditions. Participant understands that Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax advisors participant deems advisable in connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan and the Option Agreement constitute the entire agreement of the parties and superseded in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

Zoned Properties, Inc.	Participating Individual
By:	By:
Name:	Name:
Title:	Title:
Date:	Date:

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Exhibit D

Vesting Schedule

VESTING SCHEDULE

The Option Shares shall be deemed earned and issued within 10 days of the occurrence of each of the following vesting dates:

Vesting Date	Number of Shares	Service Period (Begin/End Date)(1)
July 1, 2015	125,000	May 1, 2015 to June 30, 2015
October 1, 2015	125,000	July 1, 2015 to October 30, 2015
January 1, 2016	125,000	September 1, 2015 to December 30, 2015
April 1, 2016	125,000	January 1, 2016 to March 30, 2016
July 1, 2016	125,000	May 1, 2016 to June 30, 2016
October 1, 2016	125,000	July 1, 2016 to October 30, 2016
January 1, 2017	125,000	September 1, 2016 to December 30, 2016
April 1, 2017	125,000	January 1, 2017 to March 30, 2017
Total	1,000,000

EX-10.17

Exhibit 10.17

Magnus Title Agency WHEN RECORDED MAIL TO:   Investment Property Exchange Services Attn: Paula Ripp 60 E. Rio Salado Parkway, Suite 1103 Tempe, AZ 85281     OFFICIAL RECORDS OF MARICOPA COUNTY RECORDER 20140157390,03/12/2014 12:00 4043725-21-1-1--A HELEN PURCELL ELECTRONIC RECORDING

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CAPTION HEADING: Deed of Trust

This document is being re-recorded to correct the name of the Beneficiary

DO NOT REMOVE

THIS IS PART OF THE OFFICIAL DOCUMENT

Magnus Title Agency
WHEN RECORDED RETURN TO:
DONALD J. NEWMAN DONALD J. NEWMAN PC 7330 N. 16TH Street, Suite C-117 Phoenix, Arizona 85020	OFFICIAL RECORDS OF MARICOPA COUNTY RECORDER HELEN PURCELL 20140147481  03/07/2014  12:42 4043725-20-3-3- ELECTRONIC RECORDING

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DEED OF TRUST AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS

PARTIES:	TRUSTOR:	ZONED PROPERTIES, INC. a Nevada corporation 16624 N. 90th Street, Suite 101 Scottsdale, Arizona 85260
	TRUSTEE:	STEWART TITLE & TRUST OF OF PHOENIX, INC. a Delaware corporation 244 W. Osborn Road Phoenix, Arizona 85013
	BENEFICIARY:*

*Investment Property Exchange

  Services, Inc., a California

  corporation

  60 E. Rio Salado Parkway,

  Ste. 1103, Tempe, AZ 85281

DATE: March 7, 2014

A. CONVEYANCE OF TRUST PROPERTY:

TRUSTOR HEREBY IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE, IN TRUST, with power of sale and right of entry and possession, that certain real property described in Exhibit "A" attached hereto and made a part hereof;

TOGETHER WITH all buildings and improvements now or hereafter erected thereon and all of Trustor's interest now held or hereafter acquired in any easement appurtenant to said property, or in land lying in any street, roadway or alleyway adjoining or being a part of said real property, and all personal property and fixtures now or hereafter attached to or that are necessary to the operation of the premises herein described, including, but by no means limited to, all ventilating, heating, air conditioning, plumbing, and lighting fixtures and equipment, and all power and sprinkling systems;

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TOGETHER WITH all water and water rights, pipes, flumes and ditches and the water flowing through the same, belonging or in any way appertaining to said property;

TOGETHER WITH the rents, issues and profits thereof, SUBJECT HOWEVER, to the right, power and authority hereinafter given to and conferred upon BENEFICIARY to collect and apply such rents, issues and profits;

All of said property being hereinafter referred to as the "trust property".

B. FOR THE PURPOSE OF SECURING:

1. Payment of the indebtedness evidenced by a Promissory Note of even date herewith, and any renewals, extensions, modifications or replacements thereof, in the original principal amount of TWO MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,100,000.00) delivered to Beneficiary (the "Note"), together with interest thereon, fees and late charges as provided by the Note.

2. Payment of such further sums as Trustor or any successor in ownership hereafter may borrow from Beneficiary, whether as future advancements or otherwise.

3. Payment of all monies mentioned herein or in the Note agreed or provided to be paid by Trustor.

4. Performance of each agreement of Trustor herein contained or in any other agreement given by Trustor to Beneficiary for the purpose of evidencing or securing any indebtedness hereby secured.

C. TRUSTOR'S WARRANTY:

Trustor warrants that Trustor is seized of good and merchantable title to the trust property, and that the title hereby conveyed is free, clear and unencumbered, except for the matters set forth as permitted exceptions in Exhibit "B" attached hereto.

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

1.1. To take reasonable care of the trust property; to maintain said property in good repair and condition; to replace all items of property secured by this Deed of Trust which may wear out, or be lost, damaged or destroyed; to commit or permit no waste, and do no act which will unduly impair or depreciate the value of the trust property as security; not to impair or abandon any water or other rights of whatever nature now or hereafter appurtenant to the trust property. Trustor agrees not to remove or demolish any building on the trust property; to complete or restore promptly and in good and workmanlike manner any building which may be constructed thereon and to pay when due all claims for labor performed and materials furnished therefor; and to comply with all laws affecting the trust property or requiring any alterations or improvements to be made thereon. Trustor further agrees not to do, or permit any acts to be done, which might reduce or tend to reduce the value of the trust property or to threaten the security of this Deed of Trust.

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1.2. That no Financing Statement or Security Agreement, covering the property which is or may be the subject of this Deed of Trust, or the proceeds from such property, is on file in any public office, and that, except as noted herein and for the security interest granted in this Deed of Trust, there is no lien, security interest or encumbrance in or on such property or the proceeds thereof; and that Trustor shall protect and prevent all such property from deterioration, except for ordinary wear and tear from its intended primary use.

1.3. To provide and maintain policies of fire and extended coverage insurance on the trust property in an amount not less than the minimum insurable value (as determined from time to time by Beneficiary) of the improvements, fixtures, and equipment comprising part of the trust property. Trustor will also provide public liability insurance, property damage insurance, rent loss insurance, and, when requested by Beneficiary, insurance against any other risks as are regularly required by lenders for similar types of Arizona real property, all in such amounts as may be reasonably required by Beneficiary. If the trust property is located in a "flood plain area" as defined by the Federal Insurance Administration pursuant to 44 C.F.R. Part 59, then federal flood insurance in the maximum obtainable amount (but not exceeding the loan amount) shall be required. All such policies shall be with companies or associations of companies from time to time approved by Beneficiary, shall contain standard trust deed beneficiary clauses endorsed thereon making losses payable to Beneficiary, and shall otherwise be in form and substance satisfactory to Beneficiary. Trustor shall not permit any condition to exist that would wholly or partially invalidate any such insurance. Trustor shall assign and deliver any and all policies of insurance to Beneficiary that shall be irrevocable without thirty (30) days prior notice to Beneficiary and not subject to modification without Beneficiary's prior written approval. At least fifteen (15) days before expiration of such policies, Trustor shall deliver to Beneficiary renewals thereof, or renewal certificates therefor, or the new policies if the prior policies are not renewed, along with a premium receipt evidencing payment in full of the required premiums for at least one year's coverage.

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In the event of loss, Trustor shall give immediate notice by mail to Beneficiary, and Beneficiary may make proof of loss if not made promptly by Trustor. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Beneficiary, instead of to Trustor or Trustor and Beneficiary jointly. Such insurance proceeds or any part thereof may be applied by Beneficiary, at its option but subject to the provisions of Section 2.5 below, to the payment of interest due on the indebtedness secured hereby, the reduction of the principal amount of said indebtedness (in the inverse order of maturity), the payment of any other obligation hereby secured, or the restoration or repair of the trust property pursuant to the provisions of paragraph 2.5 below. In the event Beneficiary applies the proceeds to the indebtedness or any other obligation secured hereby, any funds remaining after their satisfaction shall be remitted to Trustor. Beneficiary shall not be responsible for such insurance, for the collection of any insurance monies, or for the insolvency of any insurer or any insurance underwriter. Application of insurance proceeds by Beneficiary shall not cure or waive any default hereunder or invalidate any act done hereunder because of any such default.

In the event of sale of the trust property under the power of sale herein granted to Trustee, or foreclosure of the Deed of Trust as a mortgage, or in the event Beneficiary or a receiver appointed by the court shall take possession of the trust property without sale, all right, title and interest of Trustor in and to all transferable insurance policies then in force and any unearned premiums paid thereon shall inure to the benefit of and pass to the Beneficiary in possession, receiver, or purchaser at such sale, as the case may be, and Beneficiary is hereby appointed attorney-in-fact for Trustor to assign and transfer said policies.

1.4. To pay prior to becoming delinquent, all taxes, assessments, water dues or assessments and all other charges of every type or nature assessed, or which may be assessed, against the trust property or any part thereof or upon the interest of the Beneficiary in said trust property or upon any personal property, and to pay, when due, any other taxes (including corporate taxes), assessments or charges, claims or encumbrances that might become a lien prior to the security of this Deed of Trust, or which might have priority in distribution of the proceeds of a judicial sale. Trustor shall have the right to protest in good faith any tax assessment, but in that event, Trustor shall obtain a bond in an amount sufficient to cover the proposed assessment which shall secure ultimate payment of the taxes.

1.5. Trustor, if required by Beneficiary, shall also make monthly deposits in an account with Beneficiary, which account shall be subject to the control of Beneficiary, of a sum equal to one-twelfth (1/12) of the yearly taxes and assessments which may be levied against the premises, and the annual premiums to become due for all insurance policies required hereunder. Such payments shall be due and payable at the same time the installment payments of principal and interest under the Note are due, and shall be subject to the late charge provided in the Note, if not timely paid. The amount of such taxes, assessments and insurance premiums, when unknown, shall be estimated by Beneficiary. Such deposits shall be used by Beneficiary to pay such taxes, assessments and insurance premiums, if such accumulated funds be sufficient to pay the same, and no interest shall be paid to Trustor on any such deposits. Any insufficiency of such account to pay such charges as aforesaid shall be paid by Trustor to Beneficiary on demand. Beneficiary is further authorized to require additional deposits by Trustor, of monies to create a deposit sufficient, when added to the monthly deposits to be made by Trustor prior to the next due dates for such insurance premiums and taxes and assessments respectively, to pay such next due insurance premiums, taxes and assessments. lf, by reason of any default by Trustor under any provision of this Deed of Trust, Beneficiary declares all sums secured hereby to be due and payable, Beneficiary may then apply any funds in said account against the entire indebtedness secured hereby. The enforceability of the covenants relating to taxes, assessments and insurance herein otherwise provided shall not be affected except insofar as those obligations have been met by compliance with this paragraph. Beneficiary may, from time to time at its option, waive and after any such waiver, reinstate any or all provisions hereof requiring such deposits, by notice to Trustor in writing. While any such waiver is in effect, Trustor shall pay taxes and assessments as herein elsewhere provided.

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1.6. Upon written request by Beneficiary, Trustor will appear in and prosecute or defend any action or proceeding that may affect the priority of this Deed of Trust or the security of the Beneficiary hereunder or the trust property and will pay all reasonable costs, expenses (including the cost of searching title), and attorneys' fees incurred in such action or proceeding. Should Trustor fail to so act within such time as required to avoid entry of a default judgment Beneficiary may, at its option, appear in and defend any action or proceeding purporting to affect the priority of this Deed of Trust or the trust property or the rights or powers of Beneficiary. Beneficiary may, at its option, pay, purchase, contest, or compromise any adverse claim, encumbrance, charge or lien, that in the reasonable judgment of Beneficiary appears to be prior or superior to the lien of this Deed of Trust. All amounts paid, suffered or incurred by Beneficiary in exercising the authority herein granted, including reasonable attorneys' fees, shall be payments made pursuant to Section 1.9 below.

1.7. To comply with all laws, ordinances, regulations, covenants, conditions and restrictions affecting the trust property and not to suffer or permit any act to be done in or upon the trust property in violation thereof.

1.8. That, if Trustor fails to observe or perform any condition or obligation to be observed or performed by Trustor under this Deed of Trust or to pay expenses in connection therewith, Beneficiary, in its sole discretion and without demand or notice, may perform such obligation or do any act to cause such condition to be observed or incur and pay expenses in connection therewith. However, Beneficiary will not be obligated to perform any such obligation of Trustor or to take any action to cause any such condition to be observed and any such performance or action by Beneficiary will not create an obligation on the part of Beneficiary.

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1.9. To pay to Trustee and Beneficiary, respectively, promptly upon demand, all sums of money which they shall respectively pay pursuant to any of the provisions of this Deed of Trust, together with interest upon each of said amounts, until repaid, from the time of the payment thereof by Trustee or Beneficiary, at the Default Interest Rate set forth in the Note. Trustor agrees to pay all costs incurred by Beneficiary in connection with any modification of this Deed of Trust and any release of property subject to this Deed of Trust. Trustor further agrees to pay all costs incurred in connection with the payoff of the Note and release of this Deed of Trust.

1.10. Any amount or amounts paid by Beneficiary or Trustee under any provision of this Deed of Trust, or otherwise, shall be added to the indebtedness secured by this Deed of Trust.

2. ADDITIONAL SECURITY/COVENANTS:

2.1. This Deed of Trust shall cover all personal property now or at any time hereafter owned by Trustor and affixed to, or necessary to the operation of the trust property, and all renewals, replacements and substitutions thereof, which, to the fullest extent permitted by law, shall be deemed fixtures and a part of the real property, and shall cover all articles of personal property and all materials delivered to the trust property for incorporation or use in any construction conducted thereon, including, but not limited to, construction materials, supplies, lumber, machinery, equipment, items and fixtures, heating equipment and air conditioning equipment, together with all substitutions, accessions, repairs, replacements and additions thereof, including the proceeds of sales thereof.

In addition, this Deed of Trust covers all personal property described in Exhibit "C" attached hereto.

2.2. As additional security, Trustor hereby assigns to Beneficiary the right, power and authority to collect any rent, issues and profits of the trust property, reserving unto Trustor the right, prior to any default by Trustor, to collect and retain such rents, issues and profits. Upon any default and the expiration of any applicable cure period, Beneficiary may at any time, without notice, either in person, by agent, or by a receiver, enter upon and take possession of the trust property, sue for or otherwise collect the rents, issues and profits of said trust property, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys' fees, to any indebtedness secured hereby, and in such order as Beneficiary may determine. Upon any default and the expiration of any applicable cure period, Beneficiary may exercise any rights of Trustor to terminate any tenancy or occupancy of said property, evict any person wrongfully in possession of occupancy thereof, and let said property, in whole or part, and deliver possession thereof. The entering upon and taking possession of said trust property, the collection such rents, issues and profits, and the application thereof as aforesaid shall not cure or waive any default by Trustor hereunder.

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2.3. To the extent any property covered by this Deed of Trust consists of rights in action or personal property covered by the Uniform Commercial Code, this Deed of Trust constitutes a Security Agreement and Trustor hereby grants a security interest in such property in favor of Beneficiary; and all the above property, whether described generically or specifically, shall be kept at or on the trust property or at Trustor's place of business unless Trustor notifies Beneficiary in writing of a proposed removal of such property and Beneficiary consents in writing prior to its removal to another location. This Deed of Trust shall be self-operative with respect to all such property, but Trustor agrees to execute and deliver on demand such security agreements, financing statements and other instruments as Beneficiary may request in order to impose the lien created herein more specifically upon any of such property. Trustor agrees that all property of every nature and description, whether real or personal, covered by this Deed of Trust, together with all personal property covered by such security interests, are encumbered as one unit, and that upon default by Trustor under the Note secured hereby, or under this Deed of Trust or any security agreement given pursuant to this paragraph, this Deed of Trust and such security interests may be foreclosed or sold in the same proceedings, and all of the trust property (both realty and personally) may be sold as one unit as a going business subject to the provisions of A.R.S. §33-810(A).

2.4. Should the trust property or any part thereof be taken by reason of any public improvement or condemnation proceeding, Beneficiary shall be entitled, at its option, to commence, appear in and prosecute in its own name any action or proceeding, or to make any compromise or settlement in good faith, in connection with such action or proceeding. All such compensation and proceeds are hereby assigned to Beneficiary who shall apply same to the indebtedness secured hereby unless such improvement or condition requires restoration of the Trust property in which event so long as Trustor is not in default hereunder, Beneficiary will release such proceeds necessary for restoration pursuant to paragraph 2.5 below. Trustor agrees to execute such further assignments of any compensation, awards or other payments as Beneficiary may require.

2.5. In the event the trust property or any part thereof is damaged by fire, flood or in any other manner, all proceeds from any policies of fire or other insurance affecting the trust property are hereby assigned to Beneficiary. Beneficiary will notify Trustor within twenty (20) days following receipt of such proceeds from the insurance carrier. So long as Trustor is not in default under this Deed of Trust, as defined in Section 3.1 below, Beneficiary shall release such proceeds to enable Trustor to repair such damage upon the following terms and conditions: (a) such repair shall be made in accordance with plans and specifications drawn by an architect and completed by a licensed contractor, all of which are subject to Beneficiary's approval; (b) Trustor demonstrates to Beneficiary's reasonable satisfaction that there are sufficient proceeds (including any additional funds of Trustor) available to pay the costs of such repair; (c) the repair is made in accordance with applicable laws, regulations and building codes; (d) all contractors, suppliers, mechanics and materialmen shall be paid in full on a timely basis without any resulting adverse claim or liens and Trustor shall indemnify and hold Beneficiary harmless from any adverse claims and liens; and (e) all proceeds shall be disbursed through an appropriate escrow or other method to ensure application to the repair.

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2.6. 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 to pay same.

2.7. At any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and all notes secured hereby for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of the trust property; consent to the making of any map or plat thereof; join in the grant of any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof.

2.8. Trustor expressly covenants that if, without prior written consent of Beneficiary (a) all or any part of Trustor's interest, in the trust property is sold, transferred, assigned, mortgaged, pledged or otherwise conveyed, or (b) a contract of sale or other conveyance is entered into with respect thereto, or (c) title to the trust property or any part of it becomes vested in any party other than Trustor in any manner whatsoever, (d) any lien other than the lien created by this Deed of Trust is recorded or claimed against the trust property, then, upon the occurrence of any one or more of the foregoing events, Beneficiary shall have the right, at its option, to declare all of the accrued and unpaid interest and the entire outstanding principal under the Note to be immediately due and payable and avail itself of any and all remedies provided for in the Note and this Deed of Trust, in the event of default. Trustor shall give Beneficiary prior written notice of any proposed transaction which requires Beneficiary's written consent and Beneficiary shall have the right to require, among other things, (a) financial statements and other information relating to the proposed transferee including information about the experience and management expertise of the proposed transferee; (b) assurances, in form and substance satisfactory to Beneficiary, from Trustor and any guarantors of the indebtedness secured hereby that they will continue to be liable to Beneficiary for a reasonable fee for evaluating such information and processing the proposed transfer. Beneficiary may refuse to consent to a transfer for any reason or may condition its consent upon such events or occurrences as Beneficiary deems appropriate, including but not limited to, the payment of a transfer fee equal to one percent (1%) of the unpaid principal balance of the Note.

Beneficiary may require that: (a) the transferee or purchaser, as the case may be, execute, prior to such transfer or sale, a written assumption agreement in form and content acceptable to Beneficiary; and, (b) Trustor or purchaser or transferee, as the case may be, pay all costs of Beneficiary (including without limitation, attorneys' fees) incurred in evaluating the proposed sale or transfer and/or in preparing the assumption agreement and any and all other necessary documents associated with the assumption by the purchaser or transferee.

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The term Beneficiary used above shall include the Beneficiary named herein and any assignees of Beneficiary.

2.9. Trustor will, upon request of the Trustee or Beneficiary, promptly correct any defect, error or omission which may be discovered in the contents of this Deed of Trust or in the execution or acknowledgment hereof and will execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or as may be reasonably requested by the Trustee or by the Beneficiary to carry out more effectively the purposes of this Deed of Trust, to subject to the lien and security interest hereby created any of Trustor's properties, rights or interests covered or intended to be covered hereby, and to perfect and maintain the lien and security interest hereby created. If any rights, easements or other hereditament shall hereafter become appurtenant to the trust property or any part thereof, Trustor shall deliver to Beneficiary, upon demand, a supplemental Deed of Trust in the form approved by Beneficiary covering such rights and interests.

2.10. Trustor shall operate and maintain the trust property in compliance with the requirements of The American Disabilities Act (the "Disabilities Act").

3. DEFAULT/REMEDIES.

3.1. The following shall be events of default hereunder:

3.1.1. the failure by Trustor, to make any payment upon any indebtedness secured by this Deed of Trust within twenty (20) days of the due date;

3.1.2. the failure by Trustor to perform any covenant contained herein, in the Note, in the Loan Agreement, or in any other agreement given by Trustor to Beneficiary for the purpose of evidencing or further securing the indebtedness secured hereby;

3.1.3. the abandonment of all or any part of the trust property;

3.1.4. any representation or warranty in the Note, this Deed of Trust, the Loan Agreement, or in any other agreement, document, or instrument evidencing, securing, or relating to any of the obligations, covenants, promises, and agreements secured hereby is materially false or incorrect as of the date made;

3.1.5. if Trustor or any guarantor of the Note shall generally not pay its debts as they become due, shall admit in writing its inability to pay such debts, or shall make an assignment for the benefit of creditors, or if Trustor or any such guarantor shall take any action to authorize or in contemplation of any of the actions set forth in this subparagraph;

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3.1.6. the commencement of any case, proceeding or other action by or against Trustor or any guarantor of Trustor's obligations hereunder (i) seeking to have an order of relief entered against Trustor or such guarantor as debtor or to adjudicate Trustor or such guarantor bankrupt or insolvent; (ii) seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of Trustor or Trustor's debts or such guarantor or such guarantor's debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors; or (iii) seeking appointment of a receiver, trustee, custodian or other similar official for Trustor or such guarantor or for all or any substantial part of its property, and such case, proceeding or other action (a) results in the entry of an order for relief against Trustor or such guarantor which is not fully stayed within thirty (30) business days after the entry thereof or (b) shall remain undismissed for a period of sixty (60) days;

3.1.7. if any item of the trust property is attached, levied upon, or otherwise seized by legal process, and such attachment, levy or seizure is not quashed, stayed, or released within sixty (60) days of the occurrence thereof;

3.1.8. the enactment of any law imposing upon Beneficiary the obligation to pay all or any of the taxes agreed to be paid by Trustor herein, or prohibiting the payment thereof by Trustor as promised herein, or the rendering by any court of a decision that the undertaking by Trustor to pay such tax or taxes is legally inoperative;

3.1.9. the occurrence of a transfer or encumbrance in violation of Section 2.8 of this Deed of Trust, unless Beneficiary has given prior written consent to do so;

3.1.10. any proceeding is filed to foreclose or any notice of Trustee's sale is recorded with respect to any other lien on the trust property (whether junior or senior to this Deed of Trust).

3.2. In the event of a default under paragraph 3.1 above, for which a specific cure period is not set forth (exclusive of paragraph 3.1.1), Trustor shall have thirty (30) days following receipt of written notice of the Default from Beneficiary to cure same. Beneficiary's right to cure any default described in paragraph 3.1 above shall be limited to two (2) occurrences during any calendar year.

3.3. Upon the occurrence of a default and the expiration of any applicable cure period, Beneficiary shall have the following rights, in addition to all other rights provided herein and/or by law or equity:

3.3.1. to declare all principal indebtedness, with interest and any other sums secured hereby, immediately due and payable, without notice or demand; provided, however, that should Beneficiary, upon default of Trustor, exercise its option to declare the entire amount of the principal immediately due and payable, and should such acceleration be revoked by agreement or operation of law, then such indebtedness shall be payable in accordance with the original schedule therefor unless otherwise agreed to between Trustor and Beneficiary;

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3.3.2. to sell the trust property, after recording notice of sale, and after the lapse of such time as may be required by law, at the time and place fixed by Trustee in said notice of sale, either as a whole or in separate parcels, and in such order as Trustee may determine, at public auction to the highest bidder for cash, or, if Beneficiary shall be the highest bidder, in satisfaction of such amount secured hereby as is bid. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied;

3.3.3. to foreclose this Deed of Trust by court action;

3.3.4. to collect, in addition to all other indebtedness due hereunder, the costs of title searches, appraisals and environmental studies in preparation for foreclosure with respect to the trust property and reasonable attorneys' fees incurred as a result of such default or in pursuit of any remedy therefor, whether or not suit be commenced, which costs and fees shall be secured by this Deed of Trust;

3.3.5. to exercise the rights set forth in paragraph 2.2 hereinabove and the Assignment of Leases recorded concurrently herewith;

3.3.6. apply to any court of competent jurisdiction for the appointment of a receiver to take charge of the trust property and to manage, operate and carry on any business then being conducted or that could be conducted on the trust property, and to carry on, protect, preserve, replace and repair the trust property, and receive and collect all the rents and issues or profits thereof and to apply the same first to the payment of receiver's expenses for management, operation and protection of such business and the trust property, and then to Beneficiary for application toward the indebtedness secured hereby. Upon appointment of said receiver, Trustor shall immediately deliver possession of the trust property to such receiver, along with all records and contracts relative to the operation of the trust property, including leases, and all security or other deposits made pursuant to said leases.

3.4. Beneficiary shall have, in addition to all other rights and remedies provided herein and at law or in equity, the rights and remedies afforded by Arizona Revised Statutes Section 33-702. In the event Trustor fails or refuses to surrender possession of the trust property after any Trustee's sale, Trustor shall be deemed a tenant at sufferance, subject to eviction by means of forcible entry and detainer proceedings, provided that this remedy is not exclusive or in derogation of any other right or remedy available to Beneficiary. Trustor expressly agrees to pay to Beneficiary all costs, or expenses, including attorneys' fees, paid or incurred by Beneficiary resulting from such action, and effectiveness of this paragraph shall survive the sale of the trust property.

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3.5. If the indebtedness secured hereby is now or hereafter further secured by chattel mortgages, security interests, deeds of trust, pledges, contracts of guaranty, or other additional securities, Beneficiary may, at its option, exhaust any one or more of said securities as well as the security hereunder, either concurrently or independently and in such order as it may determine, and may apply the proceeds received upon the indebtedness secured hereby without affecting the status of, or waiving any right to exhaust, all or any other security including the security hereunder and without waiving any breach or default or any right or power, whether exercised hereunder or contained herein or in any other security instrument. Trustor hereby waives any right or privilege which it might otherwise have to require Trustee and/or Beneficiary to proceed against the assets encumbered hereby or by any other security documents or instruments securing said Note in any particular order or fashion under any legal or equitable doctrines or principles of marshalling and/or suretyship and further agrees that upon default, and after the expiration of any applicable grace period, Trustee and/or Beneficiary may proceed to exercise any or all remedies with regard to any or all assets encumbered hereby or by any other security documents or instruments securing said Note in such manner and order as Beneficiary in its sole discretion may determine.

4. MISCELLANEOUS PROVISIONS.

4.1. At all times during the life of this Deed of Trust, the Beneficiary or Trustee shall have the right to go in and upon the trust property and to inspect such property at any reasonable time, in order to determine whether the provisions of this Deed are being kept and performed.

4.2. No delay by Beneficiary or Trustee in exercising any right or remedy hereunder, or otherwise afforded by law, shall operate as a waiver of such right or remedy or preclude the exercise thereof during the continuance of any default hereunder.

4.3. If Trustor, through action or inaction, in any way impairs or threatens to impair the security or this Deed of Trust, or fails to pay any claim, lien or encumbrance which shall be prior to this Deed of Trust, or to pay, when due, any tax or assessment, or any insurance premium required hereunder, or to keep the trust property in repair, then Beneficiary or Trustee, at its option, without any obligation so to do, without notice to or demand upon Trustor (other than any notices required under Paragraphs 3.1 and 3.2 above), and without releasing Trustor from any obligation hereunder, may pay said claims, liens, encumbrances, taxes, assessments or premiums, with right of subrogation thereunder, and may take any action which Beneficiary or Trustee deems necessary to protect the security of this Deed of Trust. Trustor will pay to Beneficiary or Trustee, immediately upon demand, all sums of money advanced or expended by Beneficiary or Trustee pursuant to this paragraph, together with interest thereon on each such advance or expenditure at the default interest rate set forth in the Note, and all such sums and interest thereon shall be secured by this Deed of Trust.

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4.4. Upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and all notes secured hereby to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters of 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".

4.5. Trustee may resign by mailing or delivering notice thereof to the Beneficiary and Trustor. Beneficiary may, at any time Beneficiary may desire, appoint another Trustee in place and stead of said Trustee or any successor in trust. The title herein conveyed to Trustee shall be vested in said successor, which appointment shall be in writing and shall be duly recorded in the Recorder's Office of the County in which the trust property is situated.

4.6. Trustee shall be entitled to reasonable compensation for all services rendered or expenses incurred in the administration or execution of the trust hereby created and Trustor hereby agrees to pay same, subject to all legal limitations. Unless there is gross negligence or willful misconduct by either, Trustee and Beneficiary shall be indemnified, held harmless and reimbursed by Trustor for any liability, damage or expense, including attorneys' fees and amounts paid in settlement, which they or either of them may incur or sustain in the execution of this trust or in the doing of any act which they, or either of them, are required or permitted to do by the terms hereof or by law, and shall be reimbursed therefor in accordance with the provisions of Paragraph 4.3 hereof.

4.7. In the event suit is brought to enforce the terms of this Deed of Trust, including any action under A.R.S. § 33-814, the prevailing party shall be entitled to recover reimbursement of its attorneys' fees and all costs incurred in connection therewith, including: appraisal fees, expert witness fees, investigation costs, taxable costs, photocopying, facsimile and long distance telephone charges, and travel expenses of witnesses required to testify in said action.

4.8. Whenever possible, each provision and term of this Deed of Trust shall be interpreted in such manner as to be valid and enforceable. In the event any provision or term of this Deed of Trust should be determined to be invalid or unenforceable by a court of competent jurisdiction, all other provisions and terms of this Deed of Trust shall remain unaffected to the extent permitted by law.

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4.9. Unless otherwise required by applicable law, all notices required to be given hereunder shall be either served personally, by U.S. mail, postage prepaid, certified, return receipt requested, and addressed to Trustor, Trustee and Beneficiary at their respective addresses first above written, or by any nationally recognized overnight delivery service and delivered to Trustor, Trustee and Beneficiary at said addresses. Such addresses may be changed by notice to the other parties given in the same manner as provided in this paragraph. Notices given by U.S. mail shall be deemed to have been given upon the earlier of actual receipt or three (3) days following deposit in the United States mail, postage pre-paid, registered or certified mail, return receipt requested, to the address of Trustor, or one (1) day following pickup by a nationally recognized overnight delivery service.

4.10. The plural of any word herein shall include the singular, and the singular of any word shall include the plural, wherever such inclusion shall not be inconsistent with the context of this Deed of Trust.

4.11. This Deed of Trust, and the provisions hereof, shall be binding upon the Parties hereto and their respective personal representatives, heirs, successors and assigns.

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written.

"Trustor"	ZONED PROPERTIES, INC.
	A Nevada corporation
	By:	/s/ Marc Brannigan
		MARC BRANNIGAN
		Its CEO

STATE OF ARIZONA	)
	) ss.
County of Maricopa	)

Subscribed, sworn to, and acknowledged before me the undersigned Notary Public this 6^th day of March, 2014, by MARC BRANNIGAN.

WITNESS my hand and official seal.

Heidi Cerepanya

Notary Public

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EXHIBIT "A"

To that certain Deed of Trust and Security Agreement with Assignment of Rents, wherein “BENEFICIARY"* and ZONED PROPERTIES, INC. is named as "TRUSTOR."

LEGAL DESCRIPTION

Lots 7, 8 and 9, of UNIVERSITY INDUSTRIAL PARK, according to the Plat of record in the office of the County Recorder of Maricopa County, Arizona, recorded in Book 177 of Maps, page 3;

EXCEPT the following described parcel:

BEGINNING at the Northwest corner of Lot 8 of said subdivision, also being a corner of said Lot 9;

Thence along the boundary of Lot 9, the following courses and distances:

North 87 degrees 54 minutes 41 seconds West, 18.93 feet;

Thence South 57 degrees 38 minutes 00 seconds West, 13.82 feet;

Thence North 34 degrees 44 minutes 25 seconds West, 192.79 feet;

Thence North 70 degrees 15 minutes 30 seconds East, 61.62 feet;

Thence South 31 degrees 21 minutes 15 seconds East, 157.05 feet;

Thence South 45 degrees 36 minutes 00 seconds East, 33.06 feet to a corner of said Lot 9;

Thence leaving the boundary of Lot 9, South 58 degrees 15 minute 42 seconds West, 27.52 feet to the POINT OF BEGINNING.

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EXHIBIT "B"

To that certain Deed of Trust and Security Agreement with Assignment of Rents, wherein "BENEFICIARY” and ZONED PROPERTIES, INC. is named as "TRUSTOR."

File No: 02-04043725 — Schedule Bll

Magnus Title Agency Commitment for Title Insurance

EXCEPTIONS

Printed exceptions and exclusion from coverage are contained in the policy or policies to be issued. Copies of the policy forms should be read. They are available from the office that issued this commitment.

1. Reservations or exceptions in Patents or in Acts authorizing the issuance thereof.

2. WATER RIGHTS, claims or title to water, and agreements, covenants, conditions or rights incident thereto, whether or not shown by the public records.

3. THE LIABILITIES, OBLIGATIONS AND BURDENS imposed upon said land by reason of inclusion within the Salt River Project Agricultural improvement and Power District and Agricultural Improvement Districts.

4. TAXES AND ASSESSMENTS collectible by the County Treasurer, a lien not yet due and payable for the following year:

2014

5. TAXES AND ASSESSMENTS collectible by the County Treasurer, a lien payable but not yet due for the following year:

Second half of 2013

6. EASEMENTS as shown on the plat recorded in Book 177 of Maps, page 3.

7. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Docket	13904
Page	630
Purpose	Water Line and rights incident thereto

(Lot 8)

8. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Docket	14713
Page	467
Purpose	Underground Power and rights incident thereto

(Lot 9)

9. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Docket	16226
Page	30
Purpose	Underground Power and rights incident thereto
(Lot 7)

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10. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Document No.	96-0485654
Purpose	Antenna Site Access & Utilities Easement
(Lots 8 and 9)

11. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Document No.	2000-0586712
Purpose	Underground Power Easement
(Lots 7 and 8)

12. EASEMENT and rights incident thereto, as set forth in instrument:

Recorded in Document No.	20130743447
Purpose	Power Distribution Easement
(Lots 7 and 9)

13. COVENANT AND AGREEMENT according to the terms and conditions contained therein:

Purpose	Covenant and Agreement Regarding Maintenance of Yards for an Over-
	Sized Building (Individuals)
Recorded	February 13, 1986
Document No.	86 071550
(Lots 8 and 9)

14. COVENANT AND AGREEMENT according to the terms and conditions contained therein:

Purpose	Covenant and Agreement Regarding Maintenance of Yards for an
	Oversized Building (Corporation)
Recorded	April 23, 1986
Document No.	86 197098
(Lots 8 and 9)

15. RESTRICTIONS, CONDITIONS, COVENANTS, RESERVATIONS, including but not limited to any recitals creating easements, liabilities, obligations or party walls, omitting, if any, from the above, any restrictions based on race, color, region, sex, handicap, familial status or national origin contained in instrument

Recorded in Docket	11741
Page	888

Thereafter, First Amendment recorded in Docket 12481, page 139.

16. THE FOLLOWING MATTERS disclosed by Deed of Trust recorded in Document No. 87-236278:

a)	Encroachment of a block wall onto the public utilities easement on the East side of Lots 7, 8 and 9.
b)	Encroachment of a block wall onto the 30-foot right-of-way for roadway in the Southeasterly corner of Lot 7.

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c)	Encroachment of a block wall onto the electrical easement along the Northeasterly line of Lot 9.
d)	Electric line and transformer pad in the most Easterly corner of Lot 9.
e)	Encroachment of a refuse area onto irrigation easement in the most Northerly corner of Lot 9.
f)	Encroachment of a block wall onto the irrigation easement in the Southwest corner of Lot 9 and the Northwest corner of Lot 8.
g)	Concrete pad and extruded curb encroaching onto the water line easement on Lot 8.
h)	6-foot block wall encroaching onto the property lying West of the Northwesterly corner of Lot 8.
i)	6-foot block wall encroaching onto the property lying West of the Northwesterly corner of Lot 8.
1)	Block wall encroaching onto the property lying Northwesterly of the Northwesterly line of Lot 9.

17. UNRECORDED LEASE under the terms and conditions contained therein made by:

Lessor	Chimiarra Investments Limited, a Bahamas corporation
Lessee	AT&T wireless PCS, Inc., a Delaware corporation
Dated	September 21, 1995
Term	Five years with five consecutive options of five years to extend the original term
As disclosed by	Memorandum of Option and Site Lease Agreement
Recorded	December 18, 1995
Document No.	96-0777651

18. UNRECORDED LEASE under the terms and conditions contained therein made by:

Lessor	Chimiarra Investments Limited, a Bahamas corporation
Lessee	AT&T Wireless PCS, Inc., a Delaware corporation
Dated	September 21, 1995
Term	Five years with five consecutive options of five years to extend the original term
As disclosed by	Memorandum of Lease
Recorded	June 26, 1996
Document No.	96-0450795

19. RIGHTS OF PARTIES IN POSSESSION on month-to-month tenancy or under written but unrecorded leases.

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EXHIBIT "C"

To that certain Deed of Trust and Security Agreement with Assignment of Rents, wherein "BENEFICIARY”* and ZONED PROPERTIES, INC. is named as "TRUSTOR."

DESCRIPTION OF COLLATERAL

1. All of Trustor’s certain personal property now or at any time hereafter located on the real property described in Exhibit "A" (the "Premises"), consisting of all building materials, fixtures and equipment now or hereafter incorporated into improvements constructed upon the premises, including, but not limited to:

a) All equipment, including machinery, incinerators, boilers, all equipment for the generation or distribution of air, water, heat, electricity, light, fuel or refrigeration, or for ventilating or air conditioning purposes, or for sanitary or drainage purposes, or for the removal of dust, refuse or garbage;

b) All carpeting and other floor coverings, awnings, window shades and blinds, screens, drapes, drapery rods and brackets;

c) Any and all other trade fixtures, equipment, apparatus and personal property of Trustor located on the Premises or used in connection with the operation of the improvements thereon; and

d) Any and all renewals or replacements of, additions to and substitutions for the above-enumerated items.

2. All income, rents, issues, profits and proceeds from the Premises, subject however to the right, power and authority conferred upon Trustor and/or Beneficiary to collect and apply such income, rents, issues, profits and proceeds as set forth in this Deed of Trust;

3. All of the estate, interest or other claim or demand, which Trustor now has or may hereafter acquire, in and to the property described in this Deed of Trust, including, without limitation, all deposits made with or other security given to utility companies by Trustor with respect to the Premises and the improvements thereon, and ail advance payments of insurance premiums made by Trustor with respect thereto and claims or demands relating to insurance;

4. Insofar as permitted by applicable law, all licenses (including, but not limited to, any operating licenses) contracts, management contracts or agreements, franchise agreements, permits, authorizations or certificates required or used in connection with the ownership of, or the operation or maintenance of, the Premises and any improvements constructed thereon;

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5. All damages, royalties and revenue of every kind, nature and description whatsoever that Trustor may be entitled to receive from any person or entity owning or having or hereafter acquiring a right to the oil, gas or mineral rights and reservations regarding the Premises, with the right in Beneficiary to receive and receipt therefor and apply the same to the indebtedness secured hereby either before or after any default hereunder, and Beneficiary may demand, sue for and recover any such payments, but shall not be required to do so;

6. All of the rights of Trustor under any and all leases relating to the Premises, subject however to all the terms of such leases, including but not limited to all rents, issues, profits, reserves, deferred payments, deposits, refunds, cost savings and payments of any kind to become due to Trustor relating to the construction, operations, occupancy, use and disposition of any or all of the property;

7. All rights of Trustor under any policy or policies of insurance relating to the Premises or any of the Collateral set forth in this Exhibit C and any and all riders, amendments, extensions, renewals, supplements or extensions thereof, and all proceeds, loss payments and premium refunds which may become payable with respect to such insurance policies;

8. All construction, service, engineering, consulting, architectural and other similar contracts as such may be modified, amended or supplemented from time to time, concerning the design, construction, management, operation, occupancy, use and/or disposition of any or all of the Premises;

9. All blueprints, architectural drawings, plans, specifications, soil tests, feasibility studies, appraisals, engineering reports and similar materials owned by Trustor relating to any or all of the Premises;

10. All payment and performance bonds of guaranties and any and all modifications and extensions thereof relating to the Premises; and

11. All of the outstanding warranties and guaranties from manufacturers, vendors and contractors relating to the Premises.

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EX-21.1

Exhibit 21.1

Subsidiary Name	Jurisdiction of Incorporation
Tempe Industrial Properties, LLC	Arizona
Gilbert Property Management, LLC	Arizona
Green Valley Group, LLC	Arizona
Kingman Property Group, LLC	Arizona
Chino Valley Properties, LLC	Arizona
Zoned Oregon Properties, LLC	Oregon
Zoned Colorado Properties, LLC	Colorado
Zoned Illinois Properties, LLC	Illinois

EX-23.1

Exhibit 23.1

 

CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

We have issued our report dated October 1, 2015, with respect to the consolidated financial statements for the years ended December 31, 2013 and 2014 of Zoned Properties, Inc.containedintheRegistrationStatementandProspectuscontainedthereinofZoned Properties, Inc.onFormS-1.WeherebyconsenttotheuseoftheaforementionedreportintheRegistrationStatementandProspectuscontainedtherein,andtotheuseofournameasitappearsundertheheading“Experts.”

D.BrooksandAssociatesCPA’s,P.A.

WestPalmBeach,FL

November 24, 2015

D.BrooksandAssociatesCPA’s,P.A.319Clematis Street, Suite 318WestPalmBeach,FL33412–(561)429-6225