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1 FEUERSTEIN KULICK LLP
Kieran Ringgenberg (SBN 208600)
2 kringgenberg@dfmklaw.com
1940 Embarcadero
3 Oakland, CA 94606
Phone: 510.755.7001
4
Attorneys for Plaintiffs and Cross-
5 Defendants Reefside Health Center, Inc. and
Jakob Laggner and Cross-Defendant Nicole
6 Laggner
7
8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF SANTA CRUZ
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Case No.: 23CV01626
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REEFSIDE HEALTH CENTER, INC. and [Assigned for All Purposes to The Honorable
12 JAKOB LAGGNER, Syda K. Cogliati, Dept. 5]
13 Plaintiffs, [PROPOSED] ORDER
14 vs.
Hearing Date: April 25, 2024
15 BEAU MCKEON and DOES 1-100, inclusive;
Defendants. Hearing Time: 8:30 am
16
17 Department: 5
BEAU MCKEON,
18 Action Filed: July 11, 2023
Cross-Complainant,
19 Trial Date: None Set
20 vs.
21 REEFSIDE HEALTH CENTER, INC., JAKOB
LAGGNER, NICOLE LAGGNER, and ROES 1-
22 100, inclusive;
23 Cross-Defendants.
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No. 23CV01626 – [PROPOSED] ORDER
1 Whereas, the Court considering PLAINTIFF JAKOB LAGGNER’S MOTION TO DEEM
2 ADMITTED FACTS AND FOR MONETARY SANCTIONS AGAINST DEFENDANT BEAU
3 MCKEON as well as PLAINTIFF JAKOB LAGGNER’S MOTION TO COMPEL RESPONSES
4 TO DISCOVERY REQUESTS AND FOR MONETARY SANCTIONS AGAINST
5 DEFENDANT BEAU MCKEON, issued a Tentative Ruling, attached hereto as Exhibit A;
6 Whereas, no party made a request to be heard on the Tentative Ruling;
7 Therefore, for GOOD CAUSE APPEARING and pursuant to Local Rule 2.10, the Court
8 hereby adopts its Tentative Ruling as the Final Ruling of the Court, and:
9 (1) grants PLAINTIFF JAKOB LAGGNER’S MOTION TO DEEM ADMITTED
10 FACTS AND FOR MONETARY SANCTIONS AGAINST DEFENDANT BEAU
11 MCKEON, and the Court deems admitted all matters specified in the Requests for
12 Admission, Set One, attached hereto as Exhibit B;
13 (2) grants PLAINTIFF JAKOB LAGGNER’S MOTION TO COMPEL RESPONSES TO
14 DISCOVERY REQUESTS AND FOR MONETARY SANCTIONS AGAINST
15 DEFENDANT BEAU MCKEON, and the Court orders Defendant Beau McKeon to
16 provide verified code-compliant responses, without objection, to Form Interrogatories
17 (Set One) and Requests for Production (Set One), no later than 5/10/24; and
18 (3) the Court imposes monetary sanctions against Defendant McKeon in the amount of
19 $500.00, payable no later than 5/10/24.
20
21 IT IS SO ORDERED.
22
23 DATED: ___________________________
24 Hon. Syda K. Cogliati
25 Judge of the Superior Court
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1
PROPOSED ORDER
1 EXHIBIT A
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No. 23CV01626 – [PROPOSED] ORDER
LAW AND MOTION TENTATIVE RULINGS
DATE: APRIL 23, 2024 TIME: 8:30 A.M.
TENTATIVE RULINGS ARE NOT POSTED IN UNLAWFUL DETAINER CASES
No. 23CV01626
JAKOB LAGGNER, REEFSIDE HEALTH CENTER INC. v. McKEON
(UNOPPOSED) MOTIONS TO COMPEL FORM INTERROGATORIES (SET
ONE), REQUEST FOR PRODUCTION OF DOCUMENTS (SET ONE), TO
DEEM FACTS ADMITTED, AND FOR MONETARY SANCTIONS
The unopposed motions are granted.
This is a business dispute between a cannabis dispensary and McKeon, who entered into
a stock purchase agreement with Plaintiffs as seller and McKeon as buyer. Plaintiffs contend
McKeon drained the dispensary of cash while he managed it and in violation of the terms of the
stock purchase agreement. They claim McKeon diverted more than $250,000 in funds from the
dispensary to his personal accounts or his solely owned businesses.
Form Interrogatories, Request for Production of Documents: Plaintiff Laggner seeks
initial responses to form interrogatories and requests for production from Defendant McKeon.
The discovery was served on 12/22/23. (Ringgenberg Declaration, Exs. A and B.) Responses
were due by 1/26/24, but no responses were served then or since. Defendant McKeon is
representing himself after his attorney’s motion to withdraw was granted on 1/22/24; Defendant
failed to appear that day. (Ringgenberg Decl. ¶ 6.)
The Court orders Defendant McKeon to provide verified code-compliant responses,
without objection, to form interrogatories (set one) and requests for production (set one), no later
than 5/10/24.
Page 1 of 5
LAW AND MOTION TENTATIVE RULINGS
DATE: APRIL 23, 2024 TIME: 8:30 A.M.
Motion to deem facts admitted: Plaintiff Laggner seeks responses to request for
admissions from Defendant McKeon. The discovery was served on 12/22/23. (Ringgenberg
Decl., Ex. A.) Responses were due by 1/26/24, but no responses were served then or since.
“If a party to whom requests for admission have been directed fails to serve a timely
response, the requesting party may move for an order that the genuineness of any documents and
the truth of any matters specified in the requests be deemed admitted, as well as for a monetary
sanction pursuant to Section 2023.030 of the Code of Civil Procedure.” (8 California Points &
Authorities (Mathew Bender 2023) § 86.50.)
The Court deems admitted all matters specified in the requests for admission, set one.
(Code Civ. Procedure section 2033.280, subd. (b).) This will be the order of the Court unless
Defendant serves, before the hearing on the motion, a proposed response to the requests for
admissions that is in substantial compliance with Code of Civil Procedure section 2033.220.
The Court imposes monetary sanctions against Defendant McKeon in the amount of
$500.00, payable no later than 5/10/24.
Notice to prevailing parties: Local Rule 2.10.01 requires you to submit a proposed formal order
incorporating, verbatim, the language of any tentative ruling – or attaching and incorporating the
tentative by reference - or an order consistent with the announced ruling of the Court, in
accordance with California Rule of Court 3.1312. Such proposed order is required even if the
prevailing party submitted a proposed order prior to the hearing (unless the tentative is
simply to “grant”). Failure to comply with Local Rule 2.10.01 may result in the imposition of
sanctions following an order to show cause hearing, if a proposed order is not timely filed.
Page 2 of 5
1 EXHIBIT B
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No. 23CV01626 – [PROPOSED] ORDER
1 FEUERSTEIN KULICK LLP
Kieran Ringgenberg (SBN 208600)
2 kringgenberg@dfmklaw.com
1940 Embarcadero
3 Oakland, CA 94606
Phone: 510.755.7001
4
Attorneys for Plaintiffs and Cross-
5 Defendants Reefside Health Center, Inc. and
Jakob Laggner and Cross-Defendant Nicole
6 Laggner
7
8
SUPERIOR COURT OF THE STATE OF CALIFORNIA
9
FOR THE COUNTY OF SANTA CRUZ
10
Case No.: 23CV01626
11
REEFSIDE HEALTH CENTER, INC. and [Assigned for All Purposes to The Honorable
12 JAKOB LAGGNER, Timothy Volkmann, Dept. 5]
13 Plaintiffs, PLAINTIFF JAKOB LAGGNER'S
14 vs. FIRST SET OF REQUESTS FOR
ADMISSION TO DEFENDANT BEAU
15 BEAU MCKEON and DOES 1-100, inclusive; MCKEON
16 Defendants.
17 Action Filed: July 11, 2023
BEAU MCKEON,
18 Trial Date: None Set
Cross-Complainant,
19
20 vs.
21 REEFSIDE HEALTH CENTER, INC., JAKOB
LAGGNER, NICOLE LAGGNER, and ROES 1-
22 100, inclusive;
23 Cross-Defendants.
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No. 23CV01626 – FIRST SET OF RFAS
1 PROPOUNDING PARTY: Plaintiff Jakob Laggner
2 RESPONDING PARTY: Defendant Beau McKeon
3 SET NUMBER: One
4 Plaintiff Jakob Laggner, by his undersigned counsel, hereby requests that Defendant Beau
5 McKeon admit under oath for purposes of this actions the truth of the following facts within 30
6 days after service hereof, all in accordance with Code of Civil Procedure section 2033.010. et seq.
7
8 REQUEST FOR ADMISSION NO. 1.:
9
x
Admit that the Stock Purchase Agreement attached hereto as Exhibit A is a valid and
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11 enforceable contract between Jakob Laggner and Beau McKeon.
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REQUEST FOR ADMISSION NO. 2.:
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14 Admit that Jakob Laggner performed all of his obligations under the Stock Purchase
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Agreement except those obligations that were waived or excused from performance.
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17 REQUEST FOR ADMISSION NO. 3.:
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19 Admit that the Beau McKeon breached the Stock Purchase Agreement by failing to make a
20 $180,000 payment to Jakob Laggner due on June 15, 2023.
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REQUEST FOR ADMISSION NO. 4.:
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Admit that the Beau McKeon’s breach of the Stock Purchase Agreement has damaged Jakob
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Laggner by at least $180,000 on June 15, 2023.
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No. 23CV01626 – FIRST SET OF RFAS
1 REQUEST FOR ADMISSION NO. 5.:
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Admit that the Beau McKeon is liable to Jakob Laggner for at least $180,000 plus
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4 prejudgment interest since June 15, 2023 for breach of the Stock Purchase Agreement.
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REQUEST FOR ADMISSION NO. 6.:
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8 Admit that the Beau McKeon orally agreed with Jakob Laggner to accelerate the payment
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schedule under the Stock Purchase Agreement and make a $2 million payment by May 31,
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2023.
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12 REQUEST FOR ADMISSION NO. 7.:
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14 Admit that the Beau McKeon breached the Stock Purchase Agreement, as amended, by
15 failing to pay $2 million to Jakob Lagger on May 31, 2023.
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17 REQUEST FOR ADMISSION NO. 8.:
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Admit that the Beau McKeon’s breach of the Stock Purchase Agreement has damaged Jakob
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Laggner by at least $2 million on May 31, 2023.
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REQUEST FOR ADMISSION NO. 9.:
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23 Admit that the Beau McKeon is liable to Jakob Laggner for at least $2 million plus
24 prejudgment interest since May 31, 2023 for breach of the Stock Purchase Agreement.
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No. 23CV01626 – FIRST SET OF RFAS
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2 REQUEST FOR ADMISSION NO. 10.:
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Admit that the Beau McKeon is liable to Jakob Laggner for prevailing party attorneys’ fees
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5 and costs under the Stock Purchase Agreement.
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REQUEST FOR ADMISSION NO. 11.:
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9 Admit that the Beau McKeon diverted at least $130,000 in funds from Reefside Health
x
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Center Inc. to pay McKeon’s personal debts on his American Express account.
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REQUEST FOR ADMISSION NO. 12.:
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15 Admit that the Beau McKeon diverted at least $120,000 in funds from Reefside Health
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Center Inc. to make payments to himself or other businesses he owned.
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REQUEST FOR ADMISSION NO. 13.:
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21 Admit that the Beau McKeon’s diversion of at least $250,000 in funds from Reefside Health
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Center Inc. to pay McKeon’s personal debts on his American Express and to make payments
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to himself and other businesses he owned constituted civil theft.
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No. 23CV01626 – FIRST SET OF RFAS
1 REQUEST FOR ADMISSION NO. 14.:
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Admit that the Beau McKeon is liable to Reefside Health Center Inc. for treble damages of at
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4 least $750,000 pursuant to Penal Code § 496, subdivision (c).
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REQUEST FOR ADMISSION NO. 15.:
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8 Admit that the Beau McKeon is liable to Reefside Health Center Inc. for attorneys’ fees and
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costs pursuant to Penal Code § 496, subdivision (c).
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14 FEUERSTEIN KULICK LLP
15
16
17 Dated: December 22, 2023 By:____________________________
18 Kieran P. Ringgenberg (SBN 208600)
kringgenberg@dfmklaw.com
19 1940 Embarcadero
Oakland, CA 94606
20 Telephone: (510) 775-7000
21
Attorneys for Plaintiffs and Cross-Defendants
22 Reefside Health Center, Inc. and Jakob Laggner and
23 Cross-Defendant Nicole Laggner.
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No. 23CV01626 – FIRST SET OF RFAS
1 EXHIBIT A
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No. 23CV01626 – FIRST SET OF RFAS
DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made as of February 8, 2023 (the “Effective Date”)
by and between Beau McKeon, an individual resident of Washington (the “Purchaser”), and
Jakob Laggner (“Seller”), an individual resident of California. Purchaser and Seller are sometimes
individually referred to herein as a “Party,” and collectively referred to herein as the “Parties.”
WHEREAS, the Seller is the legal and beneficial owner of 801,000 shares of common stock (the
“Shares”) of Reefside Health Center, Inc. (the “Company”), constituting 100% of all issued and
outstanding stock of the Company; and
WHEREAS, subject to and in accordance with the terms and conditions set forth herein, at the
Closing (as defined below), Seller will sell to Purchaser, and Purchaser will purchase from Seller,
the Shares (such sale and purchase, the “Purchase”).
NOW THEREFORE in consideration of the premises and the mutual covenants herein contained,
the Parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Actions by Seller and Purchaser
(a) Purchase and Sale. Subject to the terms and conditions set forth herein,
Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, the Shares, free and clear
of Encumbrances, for the Purchase Price, as defined and provided in Article 2;
(b) Shares. At the Closing (as defined below), Seller shall direct the Company
to update the Company’s share transfer ledger to reflect the Purchase, and the Seller shall take all
other steps necessary to cause the name of the Purchaser to be entered upon the books of the
Company as the holder of the Shares following the Closing; and
(c) Delivery. The Seller and the Purchaser shall deliver such documents as
may be necessary to complete the transactions contemplated by this Agreement in connection with
the Closing.
1.2 Time and Place of Closing. The purchase and sale of the Shares (the “Closing”)
shall take place remotely via the exchange of documents and signatures at 12:00 PM Pacific time
on the first (1st) Business Day following the date that all the conditions set forth in Section 4.1
have been satisfied or waived by the applicable Party or such other time and date as may be
mutually agreed upon by the Parties.
ARTICLE 2
PURCHASE PRICE
2.1 Consideration for Shares. Subject to the provisions of this Agreement, as
consideration for the Shares, the Purchaser shall pay to Seller total consideration of Two Million
Three Hundred Thousand Dollars ($2,300,000.00) (the “Purchase Price”).
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DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594
2.2 Purchase Price Allocation.
(a) The Purchase Price will be allocated and disbursed to Seller as follows:
(i) Two Hundred Thousand Dollars ($200,000.00) payable in cash on
February 15, 2023 (irrespective of whether Closing has occurred by such date) by wire transfer of
immediately available funds to an account designated in writing by Seller (the “First Cash
Payment”);
(ii) Two Hundred Thousand Dollars ($200,000.00) payable in cash on
April 15, 2023 (irrespective of whether Closing has occurred by such date) by wire transfer of
immediately available funds to an account designated in writing by Seller (the “Second Cash
Payment”);
(iii) Two Hundred Thousand Dollars ($200,000.00) payable in cash on
June 15, 2023, (irrespective of whether Closing has occurred by such date) by wire transfer of
immediately available funds to an account designated in writing by Seller (the “Third Cash
Payment”);
(iv) One Million and Seven Hundred Thousand Dollars ($1,700,000.00),
evidenced by a promissory note (the “Note”) to be delivered by Purchaser to Seller at, and dated
as of, Closing, plus interest thereon at the rate of eight and fifty-eight hundredths percent (8.58%)
per annum, with all principal plus accrued interest paid in eighty-four (84) equal monthly
installments over seven (7) years in the amount of twenty-six thousand nine hundred and ninety
dollars and forty-seven cents ($26,990.47) per month, with the obligations of Purchaser under the
Note secured against all of the Shares and the assets of the Company and Purchaser in accordance
with the terms of the Security Documents.
2.3 Deposit. Purchaser has previously paid to Seller a non-refundable deposit in the
amount of Twenty Thousand Dollars ($20,000.00) (the “Deposit”), which amount will be credited
against the Third Cash Payment. Notwithstanding any other provision of this Agreement, the
Deposit shall be non-refundable and not subject to repayment or recovery to or by Purchaser,
regardless of whether the Closing occurs or this Agreement is terminated.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties. As of the Effective Date:
(a) the Seller makes the representations and warranties set out in Schedule I
attached hereto; and
(b) the Purchaser makes the representations and warranties set out in Schedule
II attached hereto.
3.2 Due Diligence. The Purchaser acknowledges that it has had the opportunity to
conduct due diligence and investigation with respect to the Company, and nothing appearing in or
omitted from any portion of this Agreement, including all Exhibits and Schedules hereto, shall
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DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594
give rise to a breach of representation, warranty or covenant under the Agreement to the extent
Purchaser has been provided sufficient due diligence information such that Purchaser knew or
should reasonably have known of such breach as of the Closing.
3.3 As-Is Sale. Purchaser acknowledges and agrees that, except as expressly set forth
in Schedule I to this Agreement, the Purchase of the Shares is and will be made on an “AS-IS”
basis, and that neither Seller nor any of Seller’s or Company’s representatives or agents have been
authorized to, nor has Seller or any of its of Company’s agents or representatives made, any
representation or warranty, of any kind or nature, express or implied or otherwise, regarding the
Shares or Company.
ARTICLE 4
CONDITIONS TO CLOSING; CLOSING DELIVERABLES
4.1 Conditions to Closing.
(a) Conditions to the Purchaser’s Obligations. The obligation of the
Purchaser to purchase the Shares at the Closing is subject to the fulfillment, on or before the
Closing, of each of the following conditions, unless otherwise waived by the Purchaser:
(i) Purchaser shall have received a copy of the DCC License and Local
Authorization, each of which shall be valid and in good standing, and the DCC License and Local
Authorization shall be usable to allow the continued operation of the Company’s Business at the
Location;
(ii) Seller shall have delivered or caused to be delivered to Purchaser all
closing deliverables required under Section 4.2(a);
(iii) Seller shall have performed and complied in all material respects
with all agreements and covenants required by this Agreement to be performed or complied with
by Seller prior to or on the Closing; and
(iv) There has been no change in any fact or circumstance that is subject
of the representations or warranties of Seller under Section 3.1 which would have a Material
Adverse Effect.
(b) Conditions to the Seller’s Obligations. The obligation of Seller to sell the
Shares at the Closing is subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived by Seller:
(i) The Purchaser shall have delivered all portions of the Purchase Price
payable in cash which are or have become due prior to the Closing in accordance with Article 2;
(ii) Seller and the current directors of the Company (excluding Seller)
shall have agreed upon a form of separation and release or similar agreement to be entered into by
Company and such directors immediately prior to the Closing;
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DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594
(iii) Purchaser shall have delivered or caused to be delivered to Seller all
closing deliverables required under Section 4.2(b);
(iv) Purchaser shall have performed and complied in all material
respects with all agreements and covenants required by this Agreement to be performed or
complied with by Purchaser prior to or on the Closing; and
(v) There has been no change in any fact or circumstance that is subject
of the representations or warranties of Purchaser under Section 3.1 which would have a Material
Adverse Effect.
(c) Conditions to Obligations of Each Party. The respective obligations of
each Party to consummate the purchase and sale of the Shares and take the other actions required
to be taken by each Party on or prior to the Closing is subject to the to the fulfillment, on or before
the Closing, of each of the following conditions, unless otherwise waived by the applicable Party:
(i) Purchaser shall have been approved by DCC as an “Owner”, as that
term is defined in Section 26001 of the California Business and Professions Code and associated
regulations promulgated by the DCC thereunder, with respect to the DCC license;
(ii) SCPCD shall have approved the Purchase and resulting ownership
of the Company by Purchaser;
(iii) there shall not be in effect any Order issued by any Governmental
Authority preventing the consummation of the purchase and sale of the Purchase; and
(iv) there shall not be any Applicable Law prohibiting Seller from selling
the Shares, Purchaser from acquiring the Shares, or that makes this Agreement or the
consummation of the purchase and sale of the Shares illegal.
4.2 Closing Deliverables.
(a) Seller’s Closing Deliverables. On or prior to the Closing, Seller shall
deliver or cause to be delivered to Purchaser the following:
(i) A copy of the transfer instructions delivered by Seller to the
Company directing Company to transfer the Shares on its books to Purchaser;
(ii) A duly executed copy of each Transaction Document to which Seller
is a party; and
(iii) A written resignation of all directors and officers of the Company
other than Seller.
(b) Purchaser’s Closing Deliverables. On or prior to the Closing, Purchaser
shall deliver or cause to be delivered to Seller the following:
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(i) A duly executed copy of each Transaction Document (other than the
Management Agreement) to which Purchaser is a party; and
(ii) Duly executed copies of any other documents or instruments to be
delivered in accordance with the terms of the Transaction Documents, including an executed stock
power in blank and undated with respect to the Pledged Shares in accordance with the terms of the
Stock Pledge.
ARTICLE 5
COVENANTS OF PURCHASER, SELLER AND COMPANY
5.1 License Compliance. From and after the Effective Date, Purchaser and Seller shall
comply in a timely manner and cooperate in good faith with all actions required by any
Governmental Authority under Applicable Law to effectuate the addition of Purchaser as an
“Owner” as that term is defined in Section 26001 of the California Business and Professions Code
and associated regulations promulgated by the DCC thereunder and use best efforts to assist with
any required Cannabis License amendments and filings in connection with the purchase of Shares
hereunder. Purchaser agrees to submit any required attestations, to provide fingerprints, and to
submit to any and all background checks required by any Governmental Authority pursuant to
Applicable Law, and shall certify it is in full compliance with any such screening requirements
and suitability as a listed owner or financially interested party for the Cannabis Licenses. Purchaser
understands and agrees that failure to establish suitability with the DCC and the SCPCD as an
owner or financially interested party under the Cannabis Licenses could require rescission of all
ownership rights to the Shares hereunder by order of the DCC or SCPCD in order to preserve the
Cannabis Licenses, to which Purchaser agrees to comply, and for which neither the Seller nor the
Company will be obligated to return any portion of the Purchase Price to Purchaser in any amount.
5.2 Key Executive. Until such time as the Purchase Price is paid in full, the Purchaser
shall cause the Key Executive to remain as a director of the Company and in such capacity continue
to be named on all applicable Cannabis Licenses. Once the Purchase Price is paid in full, upon
written request of the Purchaser, the Key Executive shall submit to the Company his written
resignation from such directorship.
5.3 Conduct of Business.
(a) Seller Obligation. From the Effective Date until the Closing, except as
otherwise provided in this Agreement or other Transaction Documents, or consented to in writing
by Purchaser (which consent shall not be unreasonably withheld or delayed), Seller shall cause the
Company to (a) conduct the Company in the Ordinary Course of Business; (b) use commercially
reasonable efforts to maintain and preserve intact the current operations of the Company and to
preserve the rights, goodwill and relationships of its employees, customers, lenders, suppliers,
regulators and others having relationships with the Company; and (c) maintain the physical assets
of the Company in good working order and condition, ordinary wear and tear excepted. Seller shall
provide prompt written notice to Purchaser of any event or condition that causes or would be
expected to cause a Material Adverse Effect prior to Closing. For clarity, notwithstanding the
foregoing, Seller shall have no obligations or liability to Purchaser with respect to any portion of
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the Business for which management rights have been delegated to Purchaser under the
Management Agreement.
(b) Purchaser Obligation. Upon Closing until the Purchase Price in paid in
full, Purchaser shall cause the Company to (a) conduct the Company in the Ordinary Course of
Business; (b) use commercially reasonable efforts to maintain and preserve intact the current
operations of the Company and to preserve the rights, goodwill and relationships of its employees,
customers, lenders, suppliers, regulators and others having relationships with the Company; and
(c) maintain the physical assets of the Company in good working order and condition, ordinary
wear and tear excepted. Purchaser shall provide prompt written notice to Seller of any event or
condition that causes or would be expected to cause a Material Adverse Effect following to Closing
and prior to the full payment of the Purchase Price.
5.4 Tax Treatment. Without the written consent of Seller (which consent may be
withheld in Seller’s sole discretion), Purchaser shall not make any election under Section 338 of
the Internal Revenue Code of 1986, as amended with respect to the transactions contemplated by
this Agreement.
ARTICLE 6
ADDITIONAL AGREEMENTS OF THE PARTIES
6.1 Non-Disclosure
(a) Non-Disclosure.
(i) The Purchaser shall not, directly or indirectly, at any time after the
Effective Date, disclose, divulge or communicate orally, in writing, or otherwise, any Confidential
Information of the Company or the Seller to any Person, nor use any Confidential Information of
the Company or the Seller for the Purchaser’s own purpose, or in any manner which may injure or
cause loss, whether directly or indirectly, to the Company, the Seller or their respective Affiliates.
(ii) The Seller shall not, directly or indirectly, at any time after the
Effective Date, disclose, divulge or communicate orally, in writing or otherwise, any Confidential
Information of the Purchaser to any Person, nor use any Confidential Information of the Purchaser
for the Seller’s own purpose, or in any manner which may injure or cause loss, whether directly or
indirectly, to the Purchaser or its Affiliates.
(iii) The restrictions contained in this Section 6.1(a) shall not apply
against any Party (the “Recipient Party”) with respect to Confidential Information received from
another Party (the “Disclosing Party”) which is:
(1) information that is or becomes generally available to the
public other than as a result of any disclosure made by a Person in violation of this Section;
(2) information that comes into the Recipient Party’s possession
from a third party without restriction on disclosure, unless such absence of restriction and
disclosure is in violation of an agreement directly or indirectly in favor of the Disclosing Party, as
applicable, regardless of whether the Recipient Party was or is aware of such violation, provided
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DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594
that the Recipient Party shall not be liable for any use or disclosure of such information if the
Recipient Party was unaware of such violation, but shall be liable for any use or disclosure of such
information in violation of any such agreement which use or disclosure occurs after the Recipient
Party becomes aware of such violation; or
(3) information that is required to be disclosed by Applicable
Laws, provided that the Recipient Party shall (if permitted by Applicable Laws) notify the
Disclosing Party of such requirement prior to disclosure and seek, in co-operation with the
Disclosing Party, an appropriate protective order to avoid such disclosure.
(b) Injunctive Relief. Each Party acknowledges that damages at law will be
an insufficient remedy to the Disclosing Party in view of the irreparable harm which will be
suffered by the Disclosing Party and its Affiliates if the Recipient Party violates the terms of this
Agreement, and if the Disclosing Party applies for injunctive or any other form of equitable relief,
in accordance with Section 11.6, to specifically enforce the terms of this Article 6, the Recipient
Party hereby waives the right, in defending such application, to assert that the Disclosing Party or
its Affiliates have not suffered, or will not suffer, irreparable harm or that the Disclosing Party or
its Affiliates have an equitable remedy at law or can be adequately compensated by recovery of
damages or other remedy. Nothing herein will limit the entitlement of the Disclosing Party to
actual damages.
6.2 Taxes. The Purchaser does not assume and shall not be liable for any Taxes which
may be or become payable by the Seller, including any Taxes incurred by Seller or the Company
as a consequence of the sale by the Seller to the Purchaser of the Shares hereunder, and the Seller
shall indemnify and save harmless the Purchaser from and against all such Taxes in accordance
with Section 7.1.
ARTICLE 7
INDEMNIFICATION; RELEASE
7.1 Indemnification by Seller. Seller shall indemnify, defend, and hold harmless the
Purchaser and its Affiliates, and their respective officers, directors, employees, owners, and agents
(each, a “Purchaser Indemnified Party”) from and against all Claims and Liabilities which may
be made, suffered, or brought against a Purchaser Indemnified Party or which a Purchaser
Indemnified Party may suffer or incur, directly or indirectly as a result of:
(a) any non-fulfillment or breach of any covenant or agreement of the Seller
under this Agreement; and
(b) any inaccuracy in or breach of any representation or warranty of the Seller
contained in this Agreement.
7.2 Indemnification by the Purchaser. The Purchaser shall indemnify, defend, and
hold harmless the Seller and its Affiliates, and their respective officers, directors, employees,
owners and agents (each, a “Seller Indemnified Party”), from and against all Claims and
Liabilities which may be made, suffered, or brought against a Seller Indemnified Party or which a
Seller Indemnified Party may suffer or incur, directly or indirectly as a result of:
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(a) any non-fulfillment or breach of any covenant or agreement of the Purchaser
under this Agreement; and
(b) any inaccuracy in or breach of any representation or warranty of the
Purchaser in any certificate or other document delivered by the Purchaser pursuant to this
Agreement; and
(c) any Taxes or other Liabilities of the Company arising after the Closing; and
(d) any claims against the Company, its employees, directors, shareholders, or
affiliates arising after the Closing.
7.3 Representation, Settlement and Cooperation. If any investigation, action or
other proceeding (each a “Proceeding”) is initiated against a Seller Indemnified Party or a
Purchaser Indemnified Party (each, an “Indemnitee”) and the Indemnitee intends to seek
indemnification from Seller or Purchaser (each an “Indemnitor”), as applicable, under this Article
7 on account of the Indemnitee’s involvement in the Proceeding, then the Indemnitee shall give
prompt notice to the applicable Indemnitor; provided, however, that the failure to so notify the
Indemnitor shall not relieve the Indemnitor of its obligations under this Article 7, but instead shall
reduce those obligations by the amount of damages or increased costs and expenses attributable to
the failure to give notice. Upon receipt of notice of a Proceeding for which indemnification is
available under this Article 7, the Indemnitor shall diligently defend against the Proceeding on
behalf of the Indemnitee at the Indemnitor’s own expense using counsel of its own choosing
reasonably acceptable to the Indemnitee. The Indemnitee shall have the right to employ its own
counsel in any such Proceeding, however the fees and expenses of such counsel shall be paid by
the Indemnitee unless: (i) the Indemnitor shall have given prior written consent to the employment
of such counsel, (ii) the Indemnitor shall have failed or refused to conduct the defense, or (iii) the
Indemnitee has been reasonably advised by counsel that it may have defenses available to it which
are different from or in addition to those available to the Indemnitor or that its interests in the
Proceeding are adverse to the Indemnitor’s interests. In the event of (i), (ii) or (iii) above, the
Indemnitee may defend against the Proceeding at the Indemnitor's expense. The Indemnitor or
Indemnitee, as applicable, may participate in any Proceeding being defended against by the other
at its own expense and shall not settle any Proceeding without the prior consent of the other, which
consent shall not be unreasonably withheld, unless (i) there is no finding or admission of any
violation of any Applicable Law or Order of any Government Authority or of any violation of the
rights of any Person by the Indemnitee and no effect on any other Proceedings that may be made
against the Indemnitee, and (ii) the sole relief provided is monetary damages that are paid in full
by the Indemnitor. The Indemnitor and Indemnitee shall cooperate with each other in the conduct
of any Proceeding.
7.4 Limitations.
(a) No Party shall have any liability under any provision of this Agreement for
any Claims or Liabilities to the extent that such Claims or Liabilities relate to, wholly or partly, or
are increased as a result of actions, omissions or failure to mitigate by the other Party or its officers,
directors, employees and agents. Each Party shall take and shall cause to be taken all steps
reasonably necessary to mitigate all Claims or Liabilities promptly after becoming aware of any
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event that could reasonably be expected to give rise to the same. If a Person that has a right of
indemnification under this Article 7 can, by expenditure of money, mitigate or otherwise reduce
or eliminate any Claims or Liabilities for which indemnification would otherwise be claimed, such
Person shall take such action and shall be entitled to reimbursement for such expenditures and
related expenses.
(b) In no event shall any Party be liable to the other for any Claims or Liabilities
with respect to a breach of representation, warranty or covenant under this Agreement to the extent
that the Party seeking indemnification for such Claim or Liability had Knowledge of such breach
as of the Closing.
(c) The maximum amount of indemnifiable Claims or Liabilities which may be
recovered from the Seller arising out of or resulting from the causes set forth in any provision of
this Agreement, except for the inaccuracy of any of the Fundamental Representations, shall be
limited to ten percent (10%) of the Purchase Price.
(d) Seller shall not be liable to and Purchaser Indemnified Party for
indemnification under Section 7.1(b) until the aggregate amount of all Claims or Liabilities in
respect of indemnification under Section 7.1(b) exceeds Twenty Thousand Dollars ($20,000.00).
(e) Notwithstanding anything to the contrary contained in this Agreement: (i)
no Party shall be liable for any indirect, special, incidental, exemplary, punitive or consequential
damages or for any lost profits of the other Party; (ii) no indemnification obligation of Seller shall
exist under this Agreement for any Claims or Liabilities which result from or are incurred wholly
or partly as a result of any change in Applicable Laws after the date hereof.
(f) The computation of indemnifiable Claims or Liabilities pursuant to this
Article 7 shall be made after deducting therefrom (i) any indemnity, contribution or other similar
payment recoverable by the Indemnitee from any third party with respect thereto, less any cost
actually incurred by the Indemnitee in the collection of any such proceeds, indemnity, contribution
or other similar payment; (iii) any Tax savings available to the Indemnitee as a result of such event;
and (iii) any proceeds received by the Indemnitee from any insurance policies with respect thereto.
In addition, any amount recovered by an Indemnitee from third parties with respect to a Claim or
Liability subject to indemnification under this Article 7 which has already been indemnified by an
Indemnitor shall be promptly paid over by the Indemnitee to the Indemnitor.
7.5 Survival. All representations and warranties made by the Seller or the Purchaser
in this Agreement shall survive the Closing for a period of 12 months commencing from Closing,
except that the representations and warranties: (i) set out in Sections 1.1, 1.2, 1.3, 1.4, 1.5, and 1.6
of Schedule I or any certificates or other documents delivered by the Seller shall survive the
Closing for the shorter of (x) three (3) years following the expiration of the applicable statute of
limitations and (y) the maximum period of time permitted by Applicable Laws; (ii) concerning
Tax matters set out in Section 1.21 of Schedule I shall survive the Closing for a period of 180 days
after the expiration of the period during which an assessment or reassessment of liability for Taxes,
interest or penalties under applicable legislation in respect of any taxation year ending on or before
or including the date of Closing, could be issued to the Company, having regard for any consent,
waiver, agreement or other document made or filed by or against the Company or the Purchaser;
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and (iii) in respect of a Claim or Liability based on intentional misrepresentation or fraud shall
survive the Closing for the maximum period of time permitted by Applicable Laws.
7.6 Release.
(a) Purchaser Release. As of the Closing, subject only to the Seller’s
indemnity obligations under Section 7.1, Purchaser hereby irrevocably and unconditionally
releases, cancels, and forever discharges Seller, the Company, and its and their directors, officers,
employees, subsidiaries, Affiliates, agents, and representatives from any and all claims,
complaints, causes of action, demands, damages, obligations, liabilities, losses, promises,
agreements, controversies, penalties, expenses, and executions of any kind or nature whatsoever,
whether known or unknown, actual or potential, whether arising in law or in equity, which
Purchaser may have, may have had, or may in the future obtain, arising out of or relatin
Preview
1 FEUERSTEIN KULICK LLP Kieran Ringgenberg (SBN 208600) 2 kringgenberg@dfmklaw.com 1940 Embarcadero 3 Oakland, CA 94606 Phone: 510.755.7001 4 Attorneys for Plaintiffs and Cross- 5 Defendants Reefside Health Center, Inc. and Jakob Laggner and Cross-Defendant Nicole 6 Laggner 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF SANTA CRUZ 10 Case No.: 23CV01626 11 REEFSIDE HEALTH CENTER, INC. and [Assigned for All Purposes to The Honorable 12 JAKOB LAGGNER, Syda K. Cogliati, Dept. 5] 13 Plaintiffs, [PROPOSED] ORDER 14 vs. Hearing Date: April 25, 2024 15 BEAU MCKEON and DOES 1-100, inclusive; Defendants. Hearing Time: 8:30 am 16 17 Department: 5 BEAU MCKEON, 18 Action Filed: July 11, 2023 Cross-Complainant, 19 Trial Date: None Set 20 vs. 21 REEFSIDE HEALTH CENTER, INC., JAKOB LAGGNER, NICOLE LAGGNER, and ROES 1- 22 100, inclusive; 23 Cross-Defendants. 24 25 26 27 28 No. 23CV01626 – [PROPOSED] ORDER 1 Whereas, the Court considering PLAINTIFF JAKOB LAGGNER’S MOTION TO DEEM 2 ADMITTED FACTS AND FOR MONETARY SANCTIONS AGAINST DEFENDANT BEAU 3 MCKEON as well as PLAINTIFF JAKOB LAGGNER’S MOTION TO COMPEL RESPONSES 4 TO DISCOVERY REQUESTS AND FOR MONETARY SANCTIONS AGAINST 5 DEFENDANT BEAU MCKEON, issued a Tentative Ruling, attached hereto as Exhibit A; 6 Whereas, no party made a request to be heard on the Tentative Ruling; 7 Therefore, for GOOD CAUSE APPEARING and pursuant to Local Rule 2.10, the Court 8 hereby adopts its Tentative Ruling as the Final Ruling of the Court, and: 9 (1) grants PLAINTIFF JAKOB LAGGNER’S MOTION TO DEEM ADMITTED 10 FACTS AND FOR MONETARY SANCTIONS AGAINST DEFENDANT BEAU 11 MCKEON, and the Court deems admitted all matters specified in the Requests for 12 Admission, Set One, attached hereto as Exhibit B; 13 (2) grants PLAINTIFF JAKOB LAGGNER’S MOTION TO COMPEL RESPONSES TO 14 DISCOVERY REQUESTS AND FOR MONETARY SANCTIONS AGAINST 15 DEFENDANT BEAU MCKEON, and the Court orders Defendant Beau McKeon to 16 provide verified code-compliant responses, without objection, to Form Interrogatories 17 (Set One) and Requests for Production (Set One), no later than 5/10/24; and 18 (3) the Court imposes monetary sanctions against Defendant McKeon in the amount of 19 $500.00, payable no later than 5/10/24. 20 21 IT IS SO ORDERED. 22 23 DATED: ___________________________ 24 Hon. Syda K. Cogliati 25 Judge of the Superior Court 26 27 28 1 PROPOSED ORDER 1 EXHIBIT A 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 No. 23CV01626 – [PROPOSED] ORDER LAW AND MOTION TENTATIVE RULINGS DATE: APRIL 23, 2024 TIME: 8:30 A.M. TENTATIVE RULINGS ARE NOT POSTED IN UNLAWFUL DETAINER CASES No. 23CV01626 JAKOB LAGGNER, REEFSIDE HEALTH CENTER INC. v. McKEON (UNOPPOSED) MOTIONS TO COMPEL FORM INTERROGATORIES (SET ONE), REQUEST FOR PRODUCTION OF DOCUMENTS (SET ONE), TO DEEM FACTS ADMITTED, AND FOR MONETARY SANCTIONS The unopposed motions are granted. This is a business dispute between a cannabis dispensary and McKeon, who entered into a stock purchase agreement with Plaintiffs as seller and McKeon as buyer. Plaintiffs contend McKeon drained the dispensary of cash while he managed it and in violation of the terms of the stock purchase agreement. They claim McKeon diverted more than $250,000 in funds from the dispensary to his personal accounts or his solely owned businesses. Form Interrogatories, Request for Production of Documents: Plaintiff Laggner seeks initial responses to form interrogatories and requests for production from Defendant McKeon. The discovery was served on 12/22/23. (Ringgenberg Declaration, Exs. A and B.) Responses were due by 1/26/24, but no responses were served then or since. Defendant McKeon is representing himself after his attorney’s motion to withdraw was granted on 1/22/24; Defendant failed to appear that day. (Ringgenberg Decl. ¶ 6.) The Court orders Defendant McKeon to provide verified code-compliant responses, without objection, to form interrogatories (set one) and requests for production (set one), no later than 5/10/24. Page 1 of 5 LAW AND MOTION TENTATIVE RULINGS DATE: APRIL 23, 2024 TIME: 8:30 A.M. Motion to deem facts admitted: Plaintiff Laggner seeks responses to request for admissions from Defendant McKeon. The discovery was served on 12/22/23. (Ringgenberg Decl., Ex. A.) Responses were due by 1/26/24, but no responses were served then or since. “If a party to whom requests for admission have been directed fails to serve a timely response, the requesting party may move for an order that the genuineness of any documents and the truth of any matters specified in the requests be deemed admitted, as well as for a monetary sanction pursuant to Section 2023.030 of the Code of Civil Procedure.” (8 California Points & Authorities (Mathew Bender 2023) § 86.50.) The Court deems admitted all matters specified in the requests for admission, set one. (Code Civ. Procedure section 2033.280, subd. (b).) This will be the order of the Court unless Defendant serves, before the hearing on the motion, a proposed response to the requests for admissions that is in substantial compliance with Code of Civil Procedure section 2033.220. The Court imposes monetary sanctions against Defendant McKeon in the amount of $500.00, payable no later than 5/10/24. Notice to prevailing parties: Local Rule 2.10.01 requires you to submit a proposed formal order incorporating, verbatim, the language of any tentative ruling – or attaching and incorporating the tentative by reference - or an order consistent with the announced ruling of the Court, in accordance with California Rule of Court 3.1312. Such proposed order is required even if the prevailing party submitted a proposed order prior to the hearing (unless the tentative is simply to “grant”). Failure to comply with Local Rule 2.10.01 may result in the imposition of sanctions following an order to show cause hearing, if a proposed order is not timely filed. Page 2 of 5 1 EXHIBIT B 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 No. 23CV01626 – [PROPOSED] ORDER 1 FEUERSTEIN KULICK LLP Kieran Ringgenberg (SBN 208600) 2 kringgenberg@dfmklaw.com 1940 Embarcadero 3 Oakland, CA 94606 Phone: 510.755.7001 4 Attorneys for Plaintiffs and Cross- 5 Defendants Reefside Health Center, Inc. and Jakob Laggner and Cross-Defendant Nicole 6 Laggner 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF SANTA CRUZ 10 Case No.: 23CV01626 11 REEFSIDE HEALTH CENTER, INC. and [Assigned for All Purposes to The Honorable 12 JAKOB LAGGNER, Timothy Volkmann, Dept. 5] 13 Plaintiffs, PLAINTIFF JAKOB LAGGNER'S 14 vs. FIRST SET OF REQUESTS FOR ADMISSION TO DEFENDANT BEAU 15 BEAU MCKEON and DOES 1-100, inclusive; MCKEON 16 Defendants. 17 Action Filed: July 11, 2023 BEAU MCKEON, 18 Trial Date: None Set Cross-Complainant, 19 20 vs. 21 REEFSIDE HEALTH CENTER, INC., JAKOB LAGGNER, NICOLE LAGGNER, and ROES 1- 22 100, inclusive; 23 Cross-Defendants. 24 25 26 27 28 No. 23CV01626 – FIRST SET OF RFAS 1 PROPOUNDING PARTY: Plaintiff Jakob Laggner 2 RESPONDING PARTY: Defendant Beau McKeon 3 SET NUMBER: One 4 Plaintiff Jakob Laggner, by his undersigned counsel, hereby requests that Defendant Beau 5 McKeon admit under oath for purposes of this actions the truth of the following facts within 30 6 days after service hereof, all in accordance with Code of Civil Procedure section 2033.010. et seq. 7 8 REQUEST FOR ADMISSION NO. 1.: 9 x Admit that the Stock Purchase Agreement attached hereto as Exhibit A is a valid and 10 11 enforceable contract between Jakob Laggner and Beau McKeon. 12 REQUEST FOR ADMISSION NO. 2.: 13 14 Admit that Jakob Laggner performed all of his obligations under the Stock Purchase 15 Agreement except those obligations that were waived or excused from performance. 16 17 REQUEST FOR ADMISSION NO. 3.: 18 19 Admit that the Beau McKeon breached the Stock Purchase Agreement by failing to make a 20 $180,000 payment to Jakob Laggner due on June 15, 2023. 21 REQUEST FOR ADMISSION NO. 4.: 22 23 Admit that the Beau McKeon’s breach of the Stock Purchase Agreement has damaged Jakob 24 Laggner by at least $180,000 on June 15, 2023. 25 26 27 28 2 No. 23CV01626 – FIRST SET OF RFAS 1 REQUEST FOR ADMISSION NO. 5.: 2 Admit that the Beau McKeon is liable to Jakob Laggner for at least $180,000 plus 3 4 prejudgment interest since June 15, 2023 for breach of the Stock Purchase Agreement. 5 6 REQUEST FOR ADMISSION NO. 6.: 7 8 Admit that the Beau McKeon orally agreed with Jakob Laggner to accelerate the payment 9 x schedule under the Stock Purchase Agreement and make a $2 million payment by May 31, 10 2023. 11 12 REQUEST FOR ADMISSION NO. 7.: 13 14 Admit that the Beau McKeon breached the Stock Purchase Agreement, as amended, by 15 failing to pay $2 million to Jakob Lagger on May 31, 2023. 16 17 REQUEST FOR ADMISSION NO. 8.: 18 Admit that the Beau McKeon’s breach of the Stock Purchase Agreement has damaged Jakob 19 Laggner by at least $2 million on May 31, 2023. 20 21 REQUEST FOR ADMISSION NO. 9.: 22 23 Admit that the Beau McKeon is liable to Jakob Laggner for at least $2 million plus 24 prejudgment interest since May 31, 2023 for breach of the Stock Purchase Agreement. 25 26 27 28 3 No. 23CV01626 – FIRST SET OF RFAS 1 2 REQUEST FOR ADMISSION NO. 10.: 3 Admit that the Beau McKeon is liable to Jakob Laggner for prevailing party attorneys’ fees 4 5 and costs under the Stock Purchase Agreement. 6 7 REQUEST FOR ADMISSION NO. 11.: 8 9 Admit that the Beau McKeon diverted at least $130,000 in funds from Reefside Health x 10 Center Inc. to pay McKeon’s personal debts on his American Express account. 11 12 13 REQUEST FOR ADMISSION NO. 12.: 14 15 Admit that the Beau McKeon diverted at least $120,000 in funds from Reefside Health 16 Center Inc. to make payments to himself or other businesses he owned. 17 18 19 REQUEST FOR ADMISSION NO. 13.: 20 21 Admit that the Beau McKeon’s diversion of at least $250,000 in funds from Reefside Health 22 Center Inc. to pay McKeon’s personal debts on his American Express and to make payments 23 to himself and other businesses he owned constituted civil theft. 24 25 26 27 28 4 No. 23CV01626 – FIRST SET OF RFAS 1 REQUEST FOR ADMISSION NO. 14.: 2 Admit that the Beau McKeon is liable to Reefside Health Center Inc. for treble damages of at 3 4 least $750,000 pursuant to Penal Code § 496, subdivision (c). 5 6 REQUEST FOR ADMISSION NO. 15.: 7 8 Admit that the Beau McKeon is liable to Reefside Health Center Inc. for attorneys’ fees and 9 x costs pursuant to Penal Code § 496, subdivision (c). 10 11 12 13 14 FEUERSTEIN KULICK LLP 15 16 17 Dated: December 22, 2023 By:____________________________ 18 Kieran P. Ringgenberg (SBN 208600) kringgenberg@dfmklaw.com 19 1940 Embarcadero Oakland, CA 94606 20 Telephone: (510) 775-7000 21 Attorneys for Plaintiffs and Cross-Defendants 22 Reefside Health Center, Inc. and Jakob Laggner and 23 Cross-Defendant Nicole Laggner. 24 . 25 26 27 28 5 No. 23CV01626 – FIRST SET OF RFAS 1 EXHIBIT A 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 No. 23CV01626 – FIRST SET OF RFAS DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT is made as of February 8, 2023 (the “Effective Date”) by and between Beau McKeon, an individual resident of Washington (the “Purchaser”), and Jakob Laggner (“Seller”), an individual resident of California. Purchaser and Seller are sometimes individually referred to herein as a “Party,” and collectively referred to herein as the “Parties.” WHEREAS, the Seller is the legal and beneficial owner of 801,000 shares of common stock (the “Shares”) of Reefside Health Center, Inc. (the “Company”), constituting 100% of all issued and outstanding stock of the Company; and WHEREAS, subject to and in accordance with the terms and conditions set forth herein, at the Closing (as defined below), Seller will sell to Purchaser, and Purchaser will purchase from Seller, the Shares (such sale and purchase, the “Purchase”). NOW THEREFORE in consideration of the premises and the mutual covenants herein contained, the Parties agree as follows: ARTICLE 1 PURCHASE AND SALE 1.1 Actions by Seller and Purchaser (a) Purchase and Sale. Subject to the terms and conditions set forth herein, Seller shall sell to Purchaser, and Purchaser shall purchase from Seller, the Shares, free and clear of Encumbrances, for the Purchase Price, as defined and provided in Article 2; (b) Shares. At the Closing (as defined below), Seller shall direct the Company to update the Company’s share transfer ledger to reflect the Purchase, and the Seller shall take all other steps necessary to cause the name of the Purchaser to be entered upon the books of the Company as the holder of the Shares following the Closing; and (c) Delivery. The Seller and the Purchaser shall deliver such documents as may be necessary to complete the transactions contemplated by this Agreement in connection with the Closing. 1.2 Time and Place of Closing. The purchase and sale of the Shares (the “Closing”) shall take place remotely via the exchange of documents and signatures at 12:00 PM Pacific time on the first (1st) Business Day following the date that all the conditions set forth in Section 4.1 have been satisfied or waived by the applicable Party or such other time and date as may be mutually agreed upon by the Parties. ARTICLE 2 PURCHASE PRICE 2.1 Consideration for Shares. Subject to the provisions of this Agreement, as consideration for the Shares, the Purchaser shall pay to Seller total consideration of Two Million Three Hundred Thousand Dollars ($2,300,000.00) (the “Purchase Price”). 1 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 2.2 Purchase Price Allocation. (a) The Purchase Price will be allocated and disbursed to Seller as follows: (i) Two Hundred Thousand Dollars ($200,000.00) payable in cash on February 15, 2023 (irrespective of whether Closing has occurred by such date) by wire transfer of immediately available funds to an account designated in writing by Seller (the “First Cash Payment”); (ii) Two Hundred Thousand Dollars ($200,000.00) payable in cash on April 15, 2023 (irrespective of whether Closing has occurred by such date) by wire transfer of immediately available funds to an account designated in writing by Seller (the “Second Cash Payment”); (iii) Two Hundred Thousand Dollars ($200,000.00) payable in cash on June 15, 2023, (irrespective of whether Closing has occurred by such date) by wire transfer of immediately available funds to an account designated in writing by Seller (the “Third Cash Payment”); (iv) One Million and Seven Hundred Thousand Dollars ($1,700,000.00), evidenced by a promissory note (the “Note”) to be delivered by Purchaser to Seller at, and dated as of, Closing, plus interest thereon at the rate of eight and fifty-eight hundredths percent (8.58%) per annum, with all principal plus accrued interest paid in eighty-four (84) equal monthly installments over seven (7) years in the amount of twenty-six thousand nine hundred and ninety dollars and forty-seven cents ($26,990.47) per month, with the obligations of Purchaser under the Note secured against all of the Shares and the assets of the Company and Purchaser in accordance with the terms of the Security Documents. 2.3 Deposit. Purchaser has previously paid to Seller a non-refundable deposit in the amount of Twenty Thousand Dollars ($20,000.00) (the “Deposit”), which amount will be credited against the Third Cash Payment. Notwithstanding any other provision of this Agreement, the Deposit shall be non-refundable and not subject to repayment or recovery to or by Purchaser, regardless of whether the Closing occurs or this Agreement is terminated. ARTICLE 3 REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties. As of the Effective Date: (a) the Seller makes the representations and warranties set out in Schedule I attached hereto; and (b) the Purchaser makes the representations and warranties set out in Schedule II attached hereto. 3.2 Due Diligence. The Purchaser acknowledges that it has had the opportunity to conduct due diligence and investigation with respect to the Company, and nothing appearing in or omitted from any portion of this Agreement, including all Exhibits and Schedules hereto, shall 2 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 give rise to a breach of representation, warranty or covenant under the Agreement to the extent Purchaser has been provided sufficient due diligence information such that Purchaser knew or should reasonably have known of such breach as of the Closing. 3.3 As-Is Sale. Purchaser acknowledges and agrees that, except as expressly set forth in Schedule I to this Agreement, the Purchase of the Shares is and will be made on an “AS-IS” basis, and that neither Seller nor any of Seller’s or Company’s representatives or agents have been authorized to, nor has Seller or any of its of Company’s agents or representatives made, any representation or warranty, of any kind or nature, express or implied or otherwise, regarding the Shares or Company. ARTICLE 4 CONDITIONS TO CLOSING; CLOSING DELIVERABLES 4.1 Conditions to Closing. (a) Conditions to the Purchaser’s Obligations. The obligation of the Purchaser to purchase the Shares at the Closing is subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by the Purchaser: (i) Purchaser shall have received a copy of the DCC License and Local Authorization, each of which shall be valid and in good standing, and the DCC License and Local Authorization shall be usable to allow the continued operation of the Company’s Business at the Location; (ii) Seller shall have delivered or caused to be delivered to Purchaser all closing deliverables required under Section 4.2(a); (iii) Seller shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by Seller prior to or on the Closing; and (iv) There has been no change in any fact or circumstance that is subject of the representations or warranties of Seller under Section 3.1 which would have a Material Adverse Effect. (b) Conditions to the Seller’s Obligations. The obligation of Seller to sell the Shares at the Closing is subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by Seller: (i) The Purchaser shall have delivered all portions of the Purchase Price payable in cash which are or have become due prior to the Closing in accordance with Article 2; (ii) Seller and the current directors of the Company (excluding Seller) shall have agreed upon a form of separation and release or similar agreement to be entered into by Company and such directors immediately prior to the Closing; 3 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 (iii) Purchaser shall have delivered or caused to be delivered to Seller all closing deliverables required under Section 4.2(b); (iv) Purchaser shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by Purchaser prior to or on the Closing; and (v) There has been no change in any fact or circumstance that is subject of the representations or warranties of Purchaser under Section 3.1 which would have a Material Adverse Effect. (c) Conditions to Obligations of Each Party. The respective obligations of each Party to consummate the purchase and sale of the Shares and take the other actions required to be taken by each Party on or prior to the Closing is subject to the to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by the applicable Party: (i) Purchaser shall have been approved by DCC as an “Owner”, as that term is defined in Section 26001 of the California Business and Professions Code and associated regulations promulgated by the DCC thereunder, with respect to the DCC license; (ii) SCPCD shall have approved the Purchase and resulting ownership of the Company by Purchaser; (iii) there shall not be in effect any Order issued by any Governmental Authority preventing the consummation of the purchase and sale of the Purchase; and (iv) there shall not be any Applicable Law prohibiting Seller from selling the Shares, Purchaser from acquiring the Shares, or that makes this Agreement or the consummation of the purchase and sale of the Shares illegal. 4.2 Closing Deliverables. (a) Seller’s Closing Deliverables. On or prior to the Closing, Seller shall deliver or cause to be delivered to Purchaser the following: (i) A copy of the transfer instructions delivered by Seller to the Company directing Company to transfer the Shares on its books to Purchaser; (ii) A duly executed copy of each Transaction Document to which Seller is a party; and (iii) A written resignation of all directors and officers of the Company other than Seller. (b) Purchaser’s Closing Deliverables. On or prior to the Closing, Purchaser shall deliver or cause to be delivered to Seller the following: 4 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 (i) A duly executed copy of each Transaction Document (other than the Management Agreement) to which Purchaser is a party; and (ii) Duly executed copies of any other documents or instruments to be delivered in accordance with the terms of the Transaction Documents, including an executed stock power in blank and undated with respect to the Pledged Shares in accordance with the terms of the Stock Pledge. ARTICLE 5 COVENANTS OF PURCHASER, SELLER AND COMPANY 5.1 License Compliance. From and after the Effective Date, Purchaser and Seller shall comply in a timely manner and cooperate in good faith with all actions required by any Governmental Authority under Applicable Law to effectuate the addition of Purchaser as an “Owner” as that term is defined in Section 26001 of the California Business and Professions Code and associated regulations promulgated by the DCC thereunder and use best efforts to assist with any required Cannabis License amendments and filings in connection with the purchase of Shares hereunder. Purchaser agrees to submit any required attestations, to provide fingerprints, and to submit to any and all background checks required by any Governmental Authority pursuant to Applicable Law, and shall certify it is in full compliance with any such screening requirements and suitability as a listed owner or financially interested party for the Cannabis Licenses. Purchaser understands and agrees that failure to establish suitability with the DCC and the SCPCD as an owner or financially interested party under the Cannabis Licenses could require rescission of all ownership rights to the Shares hereunder by order of the DCC or SCPCD in order to preserve the Cannabis Licenses, to which Purchaser agrees to comply, and for which neither the Seller nor the Company will be obligated to return any portion of the Purchase Price to Purchaser in any amount. 5.2 Key Executive. Until such time as the Purchase Price is paid in full, the Purchaser shall cause the Key Executive to remain as a director of the Company and in such capacity continue to be named on all applicable Cannabis Licenses. Once the Purchase Price is paid in full, upon written request of the Purchaser, the Key Executive shall submit to the Company his written resignation from such directorship. 5.3 Conduct of Business. (a) Seller Obligation. From the Effective Date until the Closing, except as otherwise provided in this Agreement or other Transaction Documents, or consented to in writing by Purchaser (which consent shall not be unreasonably withheld or delayed), Seller shall cause the Company to (a) conduct the Company in the Ordinary Course of Business; (b) use commercially reasonable efforts to maintain and preserve intact the current operations of the Company and to preserve the rights, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Company; and (c) maintain the physical assets of the Company in good working order and condition, ordinary wear and tear excepted. Seller shall provide prompt written notice to Purchaser of any event or condition that causes or would be expected to cause a Material Adverse Effect prior to Closing. For clarity, notwithstanding the foregoing, Seller shall have no obligations or liability to Purchaser with respect to any portion of 5 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 the Business for which management rights have been delegated to Purchaser under the Management Agreement. (b) Purchaser Obligation. Upon Closing until the Purchase Price in paid in full, Purchaser shall cause the Company to (a) conduct the Company in the Ordinary Course of Business; (b) use commercially reasonable efforts to maintain and preserve intact the current operations of the Company and to preserve the rights, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having relationships with the Company; and (c) maintain the physical assets of the Company in good working order and condition, ordinary wear and tear excepted. Purchaser shall provide prompt written notice to Seller of any event or condition that causes or would be expected to cause a Material Adverse Effect following to Closing and prior to the full payment of the Purchase Price. 5.4 Tax Treatment. Without the written consent of Seller (which consent may be withheld in Seller’s sole discretion), Purchaser shall not make any election under Section 338 of the Internal Revenue Code of 1986, as amended with respect to the transactions contemplated by this Agreement. ARTICLE 6 ADDITIONAL AGREEMENTS OF THE PARTIES 6.1 Non-Disclosure (a) Non-Disclosure. (i) The Purchaser shall not, directly or indirectly, at any time after the Effective Date, disclose, divulge or communicate orally, in writing, or otherwise, any Confidential Information of the Company or the Seller to any Person, nor use any Confidential Information of the Company or the Seller for the Purchaser’s own purpose, or in any manner which may injure or cause loss, whether directly or indirectly, to the Company, the Seller or their respective Affiliates. (ii) The Seller shall not, directly or indirectly, at any time after the Effective Date, disclose, divulge or communicate orally, in writing or otherwise, any Confidential Information of the Purchaser to any Person, nor use any Confidential Information of the Purchaser for the Seller’s own purpose, or in any manner which may injure or cause loss, whether directly or indirectly, to the Purchaser or its Affiliates. (iii) The restrictions contained in this Section 6.1(a) shall not apply against any Party (the “Recipient Party”) with respect to Confidential Information received from another Party (the “Disclosing Party”) which is: (1) information that is or becomes generally available to the public other than as a result of any disclosure made by a Person in violation of this Section; (2) information that comes into the Recipient Party’s possession from a third party without restriction on disclosure, unless such absence of restriction and disclosure is in violation of an agreement directly or indirectly in favor of the Disclosing Party, as applicable, regardless of whether the Recipient Party was or is aware of such violation, provided 6 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 that the Recipient Party shall not be liable for any use or disclosure of such information if the Recipient Party was unaware of such violation, but shall be liable for any use or disclosure of such information in violation of any such agreement which use or disclosure occurs after the Recipient Party becomes aware of such violation; or (3) information that is required to be disclosed by Applicable Laws, provided that the Recipient Party shall (if permitted by Applicable Laws) notify the Disclosing Party of such requirement prior to disclosure and seek, in co-operation with the Disclosing Party, an appropriate protective order to avoid such disclosure. (b) Injunctive Relief. Each Party acknowledges that damages at law will be an insufficient remedy to the Disclosing Party in view of the irreparable harm which will be suffered by the Disclosing Party and its Affiliates if the Recipient Party violates the terms of this Agreement, and if the Disclosing Party applies for injunctive or any other form of equitable relief, in accordance with Section 11.6, to specifically enforce the terms of this Article 6, the Recipient Party hereby waives the right, in defending such application, to assert that the Disclosing Party or its Affiliates have not suffered, or will not suffer, irreparable harm or that the Disclosing Party or its Affiliates have an equitable remedy at law or can be adequately compensated by recovery of damages or other remedy. Nothing herein will limit the entitlement of the Disclosing Party to actual damages. 6.2 Taxes. The Purchaser does not assume and shall not be liable for any Taxes which may be or become payable by the Seller, including any Taxes incurred by Seller or the Company as a consequence of the sale by the Seller to the Purchaser of the Shares hereunder, and the Seller shall indemnify and save harmless the Purchaser from and against all such Taxes in accordance with Section 7.1. ARTICLE 7 INDEMNIFICATION; RELEASE 7.1 Indemnification by Seller. Seller shall indemnify, defend, and hold harmless the Purchaser and its Affiliates, and their respective officers, directors, employees, owners, and agents (each, a “Purchaser Indemnified Party”) from and against all Claims and Liabilities which may be made, suffered, or brought against a Purchaser Indemnified Party or which a Purchaser Indemnified Party may suffer or incur, directly or indirectly as a result of: (a) any non-fulfillment or breach of any covenant or agreement of the Seller under this Agreement; and (b) any inaccuracy in or breach of any representation or warranty of the Seller contained in this Agreement. 7.2 Indemnification by the Purchaser. The Purchaser shall indemnify, defend, and hold harmless the Seller and its Affiliates, and their respective officers, directors, employees, owners and agents (each, a “Seller Indemnified Party”), from and against all Claims and Liabilities which may be made, suffered, or brought against a Seller Indemnified Party or which a Seller Indemnified Party may suffer or incur, directly or indirectly as a result of: 7 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 (a) any non-fulfillment or breach of any covenant or agreement of the Purchaser under this Agreement; and (b) any inaccuracy in or breach of any representation or warranty of the Purchaser in any certificate or other document delivered by the Purchaser pursuant to this Agreement; and (c) any Taxes or other Liabilities of the Company arising after the Closing; and (d) any claims against the Company, its employees, directors, shareholders, or affiliates arising after the Closing. 7.3 Representation, Settlement and Cooperation. If any investigation, action or other proceeding (each a “Proceeding”) is initiated against a Seller Indemnified Party or a Purchaser Indemnified Party (each, an “Indemnitee”) and the Indemnitee intends to seek indemnification from Seller or Purchaser (each an “Indemnitor”), as applicable, under this Article 7 on account of the Indemnitee’s involvement in the Proceeding, then the Indemnitee shall give prompt notice to the applicable Indemnitor; provided, however, that the failure to so notify the Indemnitor shall not relieve the Indemnitor of its obligations under this Article 7, but instead shall reduce those obligations by the amount of damages or increased costs and expenses attributable to the failure to give notice. Upon receipt of notice of a Proceeding for which indemnification is available under this Article 7, the Indemnitor shall diligently defend against the Proceeding on behalf of the Indemnitee at the Indemnitor’s own expense using counsel of its own choosing reasonably acceptable to the Indemnitee. The Indemnitee shall have the right to employ its own counsel in any such Proceeding, however the fees and expenses of such counsel shall be paid by the Indemnitee unless: (i) the Indemnitor shall have given prior written consent to the employment of such counsel, (ii) the Indemnitor shall have failed or refused to conduct the defense, or (iii) the Indemnitee has been reasonably advised by counsel that it may have defenses available to it which are different from or in addition to those available to the Indemnitor or that its interests in the Proceeding are adverse to the Indemnitor’s interests. In the event of (i), (ii) or (iii) above, the Indemnitee may defend against the Proceeding at the Indemnitor's expense. The Indemnitor or Indemnitee, as applicable, may participate in any Proceeding being defended against by the other at its own expense and shall not settle any Proceeding without the prior consent of the other, which consent shall not be unreasonably withheld, unless (i) there is no finding or admission of any violation of any Applicable Law or Order of any Government Authority or of any violation of the rights of any Person by the Indemnitee and no effect on any other Proceedings that may be made against the Indemnitee, and (ii) the sole relief provided is monetary damages that are paid in full by the Indemnitor. The Indemnitor and Indemnitee shall cooperate with each other in the conduct of any Proceeding. 7.4 Limitations. (a) No Party shall have any liability under any provision of this Agreement for any Claims or Liabilities to the extent that such Claims or Liabilities relate to, wholly or partly, or are increased as a result of actions, omissions or failure to mitigate by the other Party or its officers, directors, employees and agents. Each Party shall take and shall cause to be taken all steps reasonably necessary to mitigate all Claims or Liabilities promptly after becoming aware of any 8 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 event that could reasonably be expected to give rise to the same. If a Person that has a right of indemnification under this Article 7 can, by expenditure of money, mitigate or otherwise reduce or eliminate any Claims or Liabilities for which indemnification would otherwise be claimed, such Person shall take such action and shall be entitled to reimbursement for such expenditures and related expenses. (b) In no event shall any Party be liable to the other for any Claims or Liabilities with respect to a breach of representation, warranty or covenant under this Agreement to the extent that the Party seeking indemnification for such Claim or Liability had Knowledge of such breach as of the Closing. (c) The maximum amount of indemnifiable Claims or Liabilities which may be recovered from the Seller arising out of or resulting from the causes set forth in any provision of this Agreement, except for the inaccuracy of any of the Fundamental Representations, shall be limited to ten percent (10%) of the Purchase Price. (d) Seller shall not be liable to and Purchaser Indemnified Party for indemnification under Section 7.1(b) until the aggregate amount of all Claims or Liabilities in respect of indemnification under Section 7.1(b) exceeds Twenty Thousand Dollars ($20,000.00). (e) Notwithstanding anything to the contrary contained in this Agreement: (i) no Party shall be liable for any indirect, special, incidental, exemplary, punitive or consequential damages or for any lost profits of the other Party; (ii) no indemnification obligation of Seller shall exist under this Agreement for any Claims or Liabilities which result from or are incurred wholly or partly as a result of any change in Applicable Laws after the date hereof. (f) The computation of indemnifiable Claims or Liabilities pursuant to this Article 7 shall be made after deducting therefrom (i) any indemnity, contribution or other similar payment recoverable by the Indemnitee from any third party with respect thereto, less any cost actually incurred by the Indemnitee in the collection of any such proceeds, indemnity, contribution or other similar payment; (iii) any Tax savings available to the Indemnitee as a result of such event; and (iii) any proceeds received by the Indemnitee from any insurance policies with respect thereto. In addition, any amount recovered by an Indemnitee from third parties with respect to a Claim or Liability subject to indemnification under this Article 7 which has already been indemnified by an Indemnitor shall be promptly paid over by the Indemnitee to the Indemnitor. 7.5 Survival. All representations and warranties made by the Seller or the Purchaser in this Agreement shall survive the Closing for a period of 12 months commencing from Closing, except that the representations and warranties: (i) set out in Sections 1.1, 1.2, 1.3, 1.4, 1.5, and 1.6 of Schedule I or any certificates or other documents delivered by the Seller shall survive the Closing for the shorter of (x) three (3) years following the expiration of the applicable statute of limitations and (y) the maximum period of time permitted by Applicable Laws; (ii) concerning Tax matters set out in Section 1.21 of Schedule I shall survive the Closing for a period of 180 days after the expiration of the period during which an assessment or reassessment of liability for Taxes, interest or penalties under applicable legislation in respect of any taxation year ending on or before or including the date of Closing, could be issued to the Company, having regard for any consent, waiver, agreement or other document made or filed by or against the Company or the Purchaser; 9 DocuSign Envelope ID: A206D235-B409-43BE-9F76-44EC9B7DB594 and (iii) in respect of a Claim or Liability based on intentional misrepresentation or fraud shall survive the Closing for the maximum period of time permitted by Applicable Laws. 7.6 Release. (a) Purchaser Release. As of the Closing, subject only to the Seller’s indemnity obligations under Section 7.1, Purchaser hereby irrevocably and unconditionally releases, cancels, and forever discharges Seller, the Company, and its and their directors, officers, employees, subsidiaries, Affiliates, agents, and representatives from any and all claims, complaints, causes of action, demands, damages, obligations, liabilities, losses, promises, agreements, controversies, penalties, expenses, and executions of any kind or nature whatsoever, whether known or unknown, actual or potential, whether arising in law or in equity, which Purchaser may have, may have had, or may in the future obtain, arising out of or relatin