CANN TREES Corporation (QB)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 15, 2023

 

TREES CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

Colorado		000-54457		90-1072649
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

 

215 Union Boulevard, Suite 415 Lakewood, Colorado		80228
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (303) 759-1300

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On December 15, 2023, the Company entered into Amended and Restated Senior Secured Convertible Notes (“Amended Notes”) with certain accredited investors (“Investors”) party to that certain note offering consummated in September 2022, pursuant to which the Company issued and sold senior secured convertible notes (the “Notes”) with an aggregate principal amount of $13,500,000 (“Principal Amount”) to such Investors (“Original Note Offering”). The material terms of the Amended Notes include no changes to the aggregate principal amount; the maturity date; or the interest rate. Material changes reflected in the Amended Notes include the following:

 

●

25% of the total principal, i.e., $3,375,000, contains different terms than the remaining principal:

 

	o	Principal mandatorily convertible at any time during term upon occurrence of trigger event based on trading price and trading value.

	o	Interest subject to optional conversion by TREES if trigger event occurs.

o

In the event of this conversion, the Principal Amount would be reduced to $10,125,000.

 

●

Current interest payments are deferred until March 2024; further, the Company shall make ‘catch-up’ interest payments beginning in December 2024 for deferred interest.

 

●

Conversion: Up to $3,375,000 of principal will be convertible at Investors’ option at a price per share equal to $0.50.

 

●

Warrant exercise price of previously granted senior debt warrants in respect of prior 12% and 10% note offerings reduced to $0.40 per share; warrant expiration date extended to September 15, 2029.

 

●

Working capital – Lead Investor agreed to provide additional $250,000 on or after closing in a separate ‘Working Capital Note’ – 1.25x liquidation preference; and up to additional $250,000 at TREES’ option – in such event, 1.5x liquidation preference shall apply to entire amount (including initial $250k).

 

●

Lead Investor to provide up to $500,000 additional M&A financing upon mutually agreed transaction.

 

In addition to the Amended Notes and Working Capital Notes, the Company and Lead Investor executed a First Amendment to Securities Purchase Agreement and Security Agreement, the Company executed a Warrant Amendment Letter, and the Lead Investor executed an M&A Financing Letter. The foregoing descriptions of all such agreements do not purport to be complete and are qualified in their entirety by reference to the full texts thereof, which are annexed hereto as Exhibits 10.1- 10.5 and incorporated herein by reference.

 

Reference is made to the Company’s Form 8-K filed on September 16, 2022 for a complete description of the Original Note Offering.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the Amended and Restated Notes is incorporated herein by reference.

 

 

Item 3.02.   Unregistered Sales of Equity Securities.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the Warrants is incorporated herein by reference. The Warrants, and any shares of Common Stock issued upon exercise of the Warrants, if applicable, will be issued to the Investors in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof.

 

Item 9.01 Financial Statements and Exhibits.

 

(b)

Exhibits.

 

Exhibit No.		Description
10.1		Form of Amended and Restated Senior Secured Convertible Note dated December 15, 2023.
10.2		Form of Working Capital Note dated December 15, 2023.
10.3		First Amendment to Securities Purchase Agreement and Security Agreement dated December 15, 2023.
10.4		Warrant Amendment Letter dated December 15, 2023.
10.5		M&A Financing Letter dated December 15, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: December 21, 2023

 

TREES CORPORATION

 

	By:	/s/ Adam Hershey
	Name:	Adam Hershey
	Title:	Interim Chief Executive Officer

 

 

3

 

 

Exhibit 10.1

 

 

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE BORROWER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

Principal Amount: $10,443,223.00

Issue Date: December 15, 2023

 

AMENDED AND RESTATED SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

WHEREAS, Borrower and Holder entered into that certain Senior Secured Convertible Promissory Note with an original issue date of September 16, 2022 (the “Original Note”); and

 

WHEREAS, the parties desire to amend and restate the Original Note as more particularly set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby expressly acknowledged, the parties hereby agree as follows:

 

FOR VALUE RECEIVED, TREES CORPORATION, a Colorado corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of TCM Tactical Opportunities Fund II LP, or its registered assigns (the “Holder”) the principal sum of $10,443,223.00 (TEN MILLION FOUR HUNDRED AND FOURTY THREE THOUSAND TWO HUNDRED AND TWENTY THREE DOLLARS WITH NO 0/100) (the

“Principal Amount”), together with interest at the rate of twelve percent (12%) per annum on the aggregate unconverted and then outstanding Principal Amount of this Note (“Interest”), at maturity or upon acceleration or otherwise, and as set forth herein (this “Note”).

 

This Note is one of a series of Notes issued pursuant to that certain Securities Purchase Agreement dated September 15, 2022, as amended, entered into by the Borrower and the Holder (the “Purchase Agreement”), and capitalized terms not defined herein will have the meanings set forth in the Purchase Agreement.

 

 

The maturity date of this Note shall be on September 15, 2026 (the “Maturity Date”), and is the date upon which the Principal Amount, as well as all accrued and unpaid interest and other fees, shall be due and payable.

 

Except for the PIK Interest (as defined in Article III), and the Original Interest (as defined below), Interest on the outstanding Principal Amount shall be paid quarterly in arrears, starting on March 15, 2024, as set forth in Schedule A.

 

The parties expressly agree and acknowledge that as of the Issue Date there is outstanding interest under the Original Note, comprising (i) Interest Due September 15, 2023, (ii) Interest Due December 15, 2023, (iii) Original Deferred Interest, all as set forth in Schedule A (in the aggregate “Original Interest”). Original Interest shall be deemed Interest under this Note and shall be deferred and paid by Borrower in eight quarters in arrears, starting on December 15, 2024, all as set forth in Schedule A. Further to the foregoing, the parties expressly agree and acknowledge that Original Interest is subject to interest at a rate of 1% per annum from the Issue Date until the Maturity Date, payable at the Maturity Date, all as set forth in Schedule A.

 

Any amount of Principal Amount or Interest which is not paid by the Maturity Date, shall bear interest at the rate of the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum amount allowed by law, from the due date thereof until the same is paid (“Default Interest”).

 

The Borrower shall have the right to prepay all or any portion of this Note. The following procedure shall apply in connection with any such prepayment. The Borrower shall first provide notice of its intention to prepay all or any portion of this Note (“Prepayment Notice”). Within two (2) business days following delivery of the Prepayment Notice, the Borrower shall provide the “Requisite Information” as set forth in Exhibit B annexed hereto. The Holder may elect to exercise its conversion right (as set forth in Article II below) within five (5) business days following the delivery of the Requisite Information. In the event the Holder does not so exercise within such time period, the Borrower may proceed with the prepayment as specified in the Prepayment Notice.

 

All payments due hereunder (to the extent not converted into the Borrower’s common stock (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.

 

 

The following additional terms shall also apply to this Note:

 

ARTICLE I

SENIORITY

 

1.1 Seniority. This Note shall rank senior in right of payment to all other “Borrower Debt” as further set forth in that certain Security Agreement between the Borrower and the Holders dated September 16, 2022, as amended (the “Security Agreement”). “Borrower Debt” means any indebtedness now or during the term hereof for borrowed money of any kind whether evidenced by notes, debentures, bonds or similar instruments, and any guaranty of any of the foregoing, excluding (i) any other Notes issued in the Offering pursuant to the Purchase Agreement, (ii) accounts payable and trade debt and/or related cost, expenditures or payments incurred in the day- to-day operations of the business of the Borrower, (iii) operating, real estate and/or capex or similar leases, (iv) royalties existing as of the date hereof or ordinary course of business operating licenses and (vi) any other indebtedness for borrowed money incurred upon the written consent of the Holders of more than sixty-six percent (66%) of the then aggregate outstanding Principal Amount of the Notes and the Lead Investor. Notwithstanding the above, the Borrower shall not make any interest payments with respect to Borrower Debt that is junior to the Purchaser’s right of payment hereunder without Purchaser’s prior written consent.

 

1.2 Borrower Covenant. Borrower agrees that so long as any of the obligations evidenced hereby remain outstanding it will not become obligated or a guarantor with respect to any Borrower Debt that is not, by its terms, junior in right of payment to the obligations hereunder; provided however that nothing herein shall prohibit the Borrower from repaying or refinancing any or all of its Current Outstanding Notes as contemplated in the Purchase Agreement, so long as Borrower receives the prior written consent of the Lead Investor.

 

ARTICLE II

CONVERSION RIGHT

 

2.1 Optional Conversion by the Holder. Holder shall have the right at any time prior to the Maturity Date, to convert up to a total of twenty-five percent (25%) of the outstanding and unpaid Principal Amount of this Note and unpaid Interest on this Note (such amount, the “Conversion Amount”) into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified (“Conversion Shares”), at the Conversion Price set forth below. The number of Conversion Shares to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 2.3 below; provided that the Notice of Conversion is submitted by e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred except in accordance with Section 2.4 below.

 

 

2.2 Conversion Price, Adjustments.

 

(a) Conversion Price. The “Conversion Price” per share is equal to $0.50, subject to adjustment as provided below.

 

(b) Authorized Shares. The Borrower covenants that during the period the Conversion rights exist, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note.

 

(c) Adjustments for Subdivisions or Combinations of Common Stock. In the event the outstanding shares of Common Stock shall be subdivided (by stock split, by payment of stock dividend or otherwise), into a greater number of shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased such that the Holder of this Note shall be entitled to receive the number of shares of Common Stock or other capital stock of the Borrower which such Holder would have owned or been entitled to receive immediately following such action had this Note been converted immediately prior to the occurrence of such event. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased such that the Holder of this Note shall be entitled to receive the number of shares of Common Stock or other capital stock of the Borrower which such Holder would have owned or been entitled to receive immediately following such action had this Note been converted immediately prior to the occurrence of such event.

 

(d) Adjustments for Reorganization, Merger or Sale of Assets. If at any time while this Note, or any portion thereof, is outstanding there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for in subsection (d) above), (ii) a merger or consolidation with or into another corporation in which the Borrower is not the surviving entity, or a reverse triangular merger in which the Borrower is the surviving entity but the shares of the Borrower’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Borrower’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder of this Note shall thereafter be entitled to receive upon conversion of this Note the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon conversion of this Note would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Note had been converted immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 2.2. The foregoing provisions of this Section 2.2(d) shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the conversion of this Note. If the per-share consideration payable to the Holder for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Borrower’s Board of Directors. In all events, appropriate adjustment (as determined in good faith by the Borrower’s Board of Directors) shall be made in the application of the provisions of this Note with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Note shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon conversion of this Note.

 

 

2.3 Mechanics of Conversion.

 

(a) Surrender of Note Upon Conversion. The Holder and the Borrower shall maintain records showing the updated current unpaid and unconverted Principal Amount of the Note. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid Principal Amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the Principal Amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid Principal Amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note represented by this Note may be less than the amount stated on the face hereof.

 

(b) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note, and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(c) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of an e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 2.3 and Section 2.4 (and, solely in the case of conversion of the entire unpaid Principal Amount hereof, surrender of this Note), the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion in accordance with the terms hereof within fourteen (14) days.

 

 

2.4 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope satisfactory to the Borrower) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Securities Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 2.4 and who is an “accredited investor” (as defined in Rule 501(a) of the Securities Act). Except as otherwise provided (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Securities Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE BORROWER, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.”

 

The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope satisfactory to the Borrower, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Securities Act, which opinion shall be accepted by the Borrower so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold.

 

2.5 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, the Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note.

 

 

ARTICLE III

SPECIAL PROVISIONS CONCERNING CERTAIN PORTION OF NOTES

 

3.1 Portion of Notes Subject to Special Provisions. In addition to the conversion rights set forth in Article II of this Note, twenty-five percent (25%) of the Principal Amount (“Tranche B Principal”) shall be subject to the following special provisions:

 

(a) Payment of Principal. At any time prior to the Maturity Date, upon the occurrence of a Trigger Event (as defined below), Tranche B Principal, or a portion thereof as set forth in Section (c) below, shall become immediately mandatorily convertible at the Conversion Price, in one event or a series of events as set forth in Section (c) below.

 

(b) Interest on Tranche B Principal. Tranche B principal shall accrue interest at the rate of twelve percent (12%) per annum on the aggregate unconverted and then outstanding Tranche B Principal (the “PIK Interest”).

 

(c) Payment of Interest. Upon the first to occur of either (i) the Maturity Date, or (ii) a Trigger Event, PIK Interest on the applicable amount of Tranche B Principal shall be immediately due and payable, and at the Borrower’s option, communicated in writing to the Holder shall be: (i) paid in cash by Borrower on that date, or (ii) converted along with the Tranche B Principal amount being converted.

 

(d) Trigger Event. The following trigger events shall apply to the Tranche B Principal (each a “Trigger Event”):

 

First Trigger Event: The first 50% of Tranche B Principal (i.e., $1,687,000) shall convert to Common Stock upon the occurrence of the following two events:

 

A.

Common Stock has a closing price equal to or greater than $0.50 per share for five (5) consecutive trading days as reported on the OTCQB Market; and

 

B.

The aggregate dollar amount of the Common Stock traded, starting on the first day of the five (5) day span referred above and for up to ninety day thereafter (“Trading Value”) is equal to or greater than $1,687,500.

 

For purposes of calculating Trading Value for the First Trigger Event, once condition A above has been satisfied, the Trading Value shall commence accruing from, and be calculated beginning on, the first day of the five consecutive-day trading period and continuing thereafter for up to ninety days.

 

 

Second Trigger Event: The remaining 50% of Tranche B Principal (i.e., $1,687,500) shall convert to Common Stock upon the occurrence of the following three events:

 

A.

Common Stock has a closing price equal to or greater than $0.50 per share for five (5) consecutive trading days as reported on the OTCQB Market;

 

B.

The aggregate Trading Value is equal to or greater than $1,687,000; and

 

C.

The Common Stock converted upon the occurrence of the First Trigger Event has been registered with the SEC, by filing a registration statement on Form S-1 or otherwise.

 

In the case of the Second Trigger Event, condition C must first be satisfied; thereafter at any time, conditions A and B may be satisfied. For purposes of calculating Trading Value for the Second Trigger Event, once condition A above has been satisfied, the Trading Value shall commence accruing from, and be calculated beginning on, the first day of the five consecutive-day trading period and continuing for up to ninety days thereafter.

 

(e) Notice of Trigger Event. Borrower shall be obligated to give notice to Holder immediately upon occurrence of a Trigger Event, which shall in no case be later than five business days thereafter.

 

(f) Payable upon Maturity. Unless otherwise converted or paid in accordance with this Section 3.1, all Tranche B Principal and interest thereof shall be due and payable pursuant to the terms of this Note, and in any case no later than the Maturity Date.

 

(g) Mechanics of Conversion. Any conversions contemplated in Section 3.1 above shall be governed by Article II, as applicable.

 

ARTICLE IV

EVENTS OF DEFAULT; REMEDIES

 

4.1 Events of Default. The occurrence of any of the following events of default shall each be an “Event of Default”:

 

(a) Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or Interest when due under this Note, whether at the Maturity Date, upon acceleration, or otherwise, and such failure continues for a period of ten (10) business days after written notice thereof to the Borrower from the Holder.

 

 

(b) Breach of Covenants. The Borrower breaches any covenant or other term or condition contained in this Note or in any other document entered into between the Holder and Borrower in any material respect, and, except for the obligation to give notice pursuant to Article III, Section (d) above which shall not be subject to any cure period, such breach continues for a period of thirty (30) days after written notice thereof to the Borrower from the Holder.

 

(c) Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note, provided that Holder shall provide Borrower with five (5) days advance notice that Holder intends to declare that such representation or warranty was breached by the Borrower.

 

(d) Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

 

(e) Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower, which proceedings are not dismissed within ninety (90) days after institution.

 

(f) Liquidation. The Borrower commences any dissolution, liquidation or winding up of Borrower.

 

4.2 Remedies. If an Event of Default shall occur, then the Holder, provided it receives the consent of the Lead Investor (except in connection with an Event of Default resulting from Borrower’s failure to pay the Principal Amount hereof or interest thereon at the Maturity Date for which no consent is required), by written notice to the Borrower, may (i) declare the obligations due hereunder to be immediately due and payable, whereupon the sum of (x) the outstanding Principal Amount of this Note and (y) the interest and other amounts outstanding hereunder shall become and shall be forthwith due and payable, without diligence, presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and (ii) exercise any and all of its other rights under applicable law and/or hereunder. Any payment pursuant to this Section 3.2 shall be applied first to the Interest owed under this Note, second, to any other obligations (other than principal) owed hereunder and lastly to the principal balance of this Note.

 

ARTICLE IV

MISCELLANEOUS

 

5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges.

 

5.2 Notices. Any notices, consents, waivers or other communications required or permitted to be given hereunder must be in writing and will be deemed to have been given (i) upon receipt, when delivered personally or via email to the email address designated below; (ii) three days after being sent by U.S. certified mail, return receipt requested; or (iii) one day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

 

 

If to the Borrower, to:

 

TREES Corporation

215 Union Boulevard, Suite 415

Lakewood, CO 80228

Attention: David R. Fishkin, General Counsel

dfishkin@treescann.com

 

If to the Holder, to:

 

The address furnished by the Holder to the Borrower in accordance with the Purchase Agreement

 

5.3 Amendments. Except for the Borrower’s obligations to repay the outstanding Principal Amount and any accrued and unpaid interest, the terms of the Notes (and this Note), including the Maturity Date and the interest rate, may be modified with the written consent of the Borrower and the Holders of more than sixty-six percent (66%) of the then aggregate outstanding Principal Amount of the Notes and the Lead Investor.

 

5.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. This Note may not be transferred unless the Holder delivers to the Borrower a written opinion of legal counsel or otherwise satisfies the Borrower with respect to the compliance of such transfer with applicable securities laws and the transferee agrees to be bound by all of the provisions of this Note. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities Act).

 

5.5 Costs and Expenses. Borrower shall pay Holder’s reasonable expenses in connection with the transactions contemplated hereunder. After the occurrence of an Event of Default, Borrower agrees to pay Holder for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred by Holder in connection with the enforcement of this Note.

 

5.6 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Colorado, without regard to the principles of conflict of laws thereof.

 

 

5.7 Exclusive Jurisdiction. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall only be commenced in the state and federal courts sitting in Denver County, State of Colorado (the “Colorado Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Colorado Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Note), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Colorado Courts, or such Colorado Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.

 

5.8 JURY TRIAL WAIVER. THE BORROWER AND THE HOLDER HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS NOTE.

 

5.9 Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

** signature page to follow **

 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on the Issue Date.

 

TREES Corporation

 

	By:	/s/ Adam Hershey
		Name: Adam Hershey
		Title: Interim Chief Executive Officer

 

SIGNATURE PAGE TO SENIOR CONVERTIBLE PROMISSORY NOTE

 

 

Schedule A

 

Interest Payment Schedule

 

Exhibit A

Interest Payment Schedule (Lead Investor)

 

				Original Note Interest																								New Note Interest
Date		Quarter		Interest Due 9/15/2023				Interest Due 12/15/2023				Original Deferred Interest				Interest on Interest Due 9/15/2023				Interest On Interest Due 12/15/2023				Interest On Original Def. Interest				Interest				Total to be Paid per Quarter
9/15/2023		Q3 23		$	-			$	-			$	-			$	-			$	-			$	-			$	-			$	-
12/15/2023		Q4 23			-				-				-				-				-				-				-				-
3/15/2024		Q1 24			-				-				-				-				-				-				234,973				234,973
6/15/2024		Q2 24			-				-				-				-				-				-				234,973				234,973
9/15/2024		Q3 24			-				-				-				-				-				-				234,973				234,973
12/15/2024		Q4 24			39,162				29,372				62,268				-				-				-				234,973				365,774
3/15/2025		Q1 25			39,162				29,372				62,268				-				-				-				234,973				365,774
6/15/2025		Q2 25			39,162				29,372				62,268				-				-				-				234,973				365,774
9/15/2025		Q3 25			39,162				29,372				62,268				-				-				-				234,973				365,774
12/15/2025		Q4 25			39,162				29,372				62,268				-				-				-				234,973				365,774
3/15/2026		Q1 26			39,162				29,372				62,268				-				-				-				234,973				365,774
6/15/2026		Q2 26			39,162				29,372				62,268				-				-				-				234,973				365,774
9/15/2026		Q3 26			39,162				29,372				62,268				79,891				52,869				112,364				234,973				610,897
Total				$	313,297			$	234,973			$	498,142			$	79,891			$	52,869			$	112,364			$	2,584,698			$	3,876,232

 

 

EXHIBIT A

 

Notice of Conversion

 

The undersigned hereby elects to convert $___________ principal amount of the Senior Convertible Promissory Note dated as of December 15, 2023 (the “Note”) issued by TREES Corporation, a Colorado corporation (the “Borrower”), into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, according to the conditions of the Note, as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

☐

The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

 

DTC Broker:

Account Number:

 

☐

The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

 

__________________________________

 

 

__________________________________

 

Date of Conversion:
Applicable Conversion Price:		$
Number of Shares of Common Stock to be Issued Pursuant to Conversion of this Note:
Amount of Principal Balance Due remaining under this Note after this conversion:		$

 

HOLDER: [______________]

 

By:
Name:
Title:
Date:

 

 

EXHIBIT B

 

Requisite Information

 

1.		Current capitalization table;
2.		Interim financial statements if not yet filed with the SEC (unaudited non-GAAP);
3.		Any term sheets or other information related to proposed acquisitions or other material transactions;
4.		Copies of any third-party valuations;
5.		Latest available projections and or budgets;
6.		Update on any litigation, government investigations or claims not otherwise reported publicly;
7.		Anything else the parties may believe to be relevant for a conversion decision.

 

 

 

 

 

Exhibit 10.2

 

 

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE BORROWER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

Principal Amount: $500,000

Issue Date: December 15, 2023

 

FORM OF SENIOR SECURED PROMISSORY NOTE

 

FOR VALUE RECEIVED, TREES CORPORATION, a Colorado corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of TCM Tactical Opportunities Fund II LP, or its registered assigns (the “Holder”) up to the principal sum of $500,000.00 FIVE HUNDRED THOUSAND DOLLARS WITH NO 0/100

(the “Principal Amount”), together with interest at the rate of twelve percent (12%) per annum on the aggregate and then outstanding Principal Amount of this Note, at maturity or upon acceleration or otherwise, as set forth herein (this “Note”).

 

Borrower shall be entitled, at any time prior to the Maturity Date, to request from Holder in writing in the manner set forth in Exhibit A, and Holder commits to lend to Borrower upon request pursuant to the provisions of this Note, in up to two installments of no less than $250,000.00 each, an amount of up to the Principal Amount.

 

The maturity date of this Note shall be on September 15, 2026 (the “Maturity Date”), and is the date upon which the Principal Amount, as well as all accrued and unpaid interest and other fees, shall be due and payable.

 

Interest on the outstanding Principal Amount shall be paid quarterly in arrears.

 

Any amount of principal or interest on this Note, which is not paid by the Maturity Date, shall bear interest at the rate of the lesser of (i) eighteen percent (18%) per annum or (ii) the maximum amount allowed by law, from the due date thereof until the same is paid (“Default Interest”).

 

 

The Borrower shall have the right to prepay all or any portion of this Note. The following procedure shall apply in connection with any such prepayment. The Borrower shall first provide notice of its intention to prepay all or any portion of this Note (“Prepayment Notice”).

 

All payments due hereunder in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed.

 

ARTICLE I
SENIORITY

 

1.1 Seniority. This Note shall rank pari passu with that certain Amended and Restated Senior Secured Promissory Note, issued by Borrower to holder on even date herewith. Borrower shall not make any interest payments with respect to Borrower Debt that is junior to this Note. “Borrower Debt” means any indebtedness now or during the term hereof for borrowed money of any kind whether evidenced by notes, debentures, bonds or similar instruments, and any guaranty of any of the foregoing, excluding (i) any other Notes issued in the Offering pursuant to the Purchase Agreement, (ii) accounts payable and trade debt and/or related cost, expenditures or payments incurred in the day-to-day operations of the business of the Borrower, (iii) operating, real estate and/or capex or similar leases, (iv) royalties existing as of the date hereof or ordinary course of business operating licenses and (vi) any other indebtedness for borrowed money incurred upon the written consent of the Holder.

 

1.2 Borrower Covenant. Borrower agrees that so long as any of the obligations evidenced hereby remain outstanding it will not become obligated or a guarantor with respect to any Borrower Debt that is not, by its terms, junior in right of payment to the obligations hereunder; provided however that nothing herein shall prohibit the Borrower from repaying or refinancing any or all of its notes ranking pari passu with this Note.

 

 

ARTICLE II
LIQUIDATION
PREFERENCE

 

2.1 Holder Liquidation Preference. The outstanding Principal on this Note shall be payable in accordance with this Section 2.1. In addition to interest and other fees as set forth herein, upon the earlier of the Maturity Date, or the date of repayment as allowed under this Note, Borrower shall make the following payment to Holder:

 

(a) If the Borrower elects to request $250,000.00 under this Note, Borrower shall pay Holder an amount equal to the $250,000.00 multiplied by 1.25.

 

(b) If the Borrower elects to request $500,000.00 under this Note, Borrower shall pay Holder an amount equal to the $500,000.00 multiplied by 1.5

 

ARTICLE III

EVENTS OF DEFAULT; REMEDIES

 

3.2 Events of Default. The occurrence of any of the following events of default shall each be an “Event of Default”:

 

(a) Failure to Pay Principal or Interest. The Borrower fails to pay the Principal Amount hereof or interest thereon when due on this Note, whether at the Maturity Date, upon acceleration, or otherwise, and such failure continues for a period of ten (10) business days after written notice thereof to the Borrower from the Holder.

 

(b) Breach of Covenants. The Borrower breaches any covenant or other term or condition contained in this Note or in any other document entered into between the Holder and Borrower in any material respect, and such breach continues for a period of thirty (30) days after written notice thereof to the Borrower from the Holder.

 

(c) Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note, provided that Holder shall provide Borrower with five (5) days advance notice that Holder intends to declare that such representation or warranty was breached by the Borrower.

 

(d) Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

 

(e) Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower, which proceedings are not dismissed within ninety (90) days after institution.

 

(f) Liquidation. The Borrower commences any dissolution, liquidation or winding up of Borrower.

 

 

3.3 Remedies. If an Event of Default shall occur, then the Holder, provided it receives the consent of the Lead Investor (except in connection with an Event of Default resulting from Borrower’s failure to pay the Principal Amount hereof or interest thereon at the Maturity Date for which no consent is required), by written notice to the Borrower, may (i) declare the obligations due hereunder to be immediately due and payable, whereupon the sum of (x) the outstanding Principal Amount of this Note and (y) the interest and other amounts outstanding hereunder shall become and shall be forthwith due and payable, without diligence, presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and (ii) exercise any and all of its other rights under applicable law and/or hereunder. Any payment pursuant to this Section 3.2 shall be applied first to the Interest owed under this Note, second, to any other obligations (other than principal) owed hereunder and lastly to the principal balance of this Note.

 

ARTICLE IV
MISCELLANEOUS

 

4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges.

 

4.2 Notices. Any notices, consents, waivers or other communications required or permitted to be given hereunder must be in writing and will be deemed to have been given (i) upon receipt, when delivered personally or via email to the email address designated below; (ii) three days after being sent by U.S. certified mail, return receipt requested; or (iii) one day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses for such communications shall be:

 

If to the Borrower, to:

 

TREES Corporation

1901 S. Navajo Street

Denver, CO 80223

Attention: David R. Fishkin, General Counsel

dfishkin@treescann.com

 

If to the Holder, to:

 

TCM Tactical Opportunities Fund II, LP

777 Westchester Avenue, Suite 203,

White Plains, NY 10604

Attention: Douglas Troob

dtroob@troobcapital.com

 

4.3 Amendments. Except for the Borrower’s obligations to repay the outstanding Principal Amount and any accrued and unpaid interest, the terms of this Note may be modified with the written consent of the Borrower and the Holder.

 

 

4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns. This Note may not be transferred unless the Holder delivers to the Borrower a written opinion of legal counsel or otherwise satisfies the Borrower with respect to the compliance of such transfer with applicable securities laws and the transferee agrees to be bound by all of the provisions of this Note. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities Act).

 

4.5 Costs and Expenses. Borrower shall pay Holder’s reasonable expenses in connection with the transactions contemplated herein. After the occurrence of an Event of Default, Borrower agrees to pay Holder for all reasonable out-of-pocket costs and expenses, including reasonable attorneys’ fees, incurred by Holder in connection with the enforcement of this Note.

 

4.6 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Colorado, without regard to the principles of conflict of laws thereof.

 

4.7 Exclusive Jurisdiction. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by this Note (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall only be commenced in the state and federal courts sitting in Denver County, State of Colorado (the “Colorado Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Colorado Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Note), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such Colorado Courts, or such Colorado Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.

 

4.8 JURY TRIAL WAIVER. THE BORROWER AND THE HOLDER HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS NOTE.

 

4.9 Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

** signature page to follow **

 

 

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on the Issue Date.

 

	TREES Corporation
	By:	/s/ Adam Hershey
		Name:	Adam Hershey
		Title:	Interim Chief Executive Officer

 

 

EXHIBIT A

 

Notice of Request for Funds

 

The undersigned hereby elects to request $                         principal amount of the Note dated as of December 15, 2023 (the “Note”) issued by TREES Corporation, a Colorado corporation (the “Borrower”), and requests that the amount above be deposited in the following account:

 

	-	Bank:
	-	Address:
	-	Name on Account:
	-	Account Number:
	-	Routing Number:

 

Sincerely,
	TREES Corporation
	By:	/s/ Adam Hershey
		Name:	Adam Hershey
		Title:	Interim Chief Executive Officer

 

Exhibit 10.3

 

Offering Document No.: ________

 

 

 

TREES CORPORATION

 

 

First Amendment to the Securities Purchase Agreement and to the Security Agreement

 

 

Senior Secured Convertible Promissory Notes

 

and

 

Warrants to Purchase Common Stock

 

 

December 15, 2023

 

CONFIDENTIAL

 

 

Offering Document No.: _____

 

AMENDMENT TO THE SECURITIES PURCHASE AGREEMENT AND THE SECURITY AGREEMENT

 

THIS FIRST AMENDMENT TO THE SECURITIES PURCHASE AGREEMENT AND THE SECURITY AGREEMENT (this “Amendment”) is entered into as of December 15, 2023, by and between TREES Corporation, a Colorado corporation (the “Company”), and the persons and entities identified on the signature page hereof (each individually a “Purchaser,” and collectively, the “Purchasers”).

 

RECITALS

 

WHEREAS, Company and Purchasers entered into that certain Securities Purchase Agreement dated September 15, 2023 (the “Agreement”), whereby the Company conducted a private offering to accredited investors (the “Offering”) of its securities consisting of an aggregate of up to $13,500,000 in principal (“Principal Amount”) (subject to increase by the Company with the prior written consent of TCM Tactical Opportunities Fund II LP (hereafter “Lead Investor”)) of senior secured convertible promissory notes;

 

WHEREAS, the Company issued certain senior secured convertible promissory notes (each, a “Note” and, collectively, the “Notes”); and certain warrants exercisable for shares of common stock of the Company (each, a “Warrant” and, collectively, the “Warrants”);

 

WHEREAS, in connection with the Agreement, and to secure payment on the Notes, the Company and the Purchasers entered into that certain Security Agreement of even date therewith (the “Security”), and

 

WHEREAS, the Company and the Purchasers wish to amend the Agreement, the Security, the Notes, and the Warrants pursuant the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers hereby agree as follows:

 

1.

Definitions. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Agreement.

 

2.

Amendment of Notes and Warrants. The Company and the purchasers shall execute amended and restated promissory notes of even date herewith, substantially in the form of Exhibit A, that shall substitute the Notes (the “Amended and Restated Notes”). The Companies and the Purchasers shall also execute a first amendment to the Warrants of even date herewith, substantially in the form of Exhibit B (the warrants, as amended, the “Amended Warrants”).

 

 

Offering Document No.: _____

 

3.

Certain Amendments to the Agreement and the Security. The parties agree to amend the Agreement and the Security so to be consistent with the terms of the Amended and Restated Notes, and the Amended Warrants, so that all references in the Agreement and the Security to the Notes and Warrants shall be deemed to be a reference to the Amended and Restated Notes, and the Amended Warrants, respectively. In addition to the foregoing, the parties agree to the following amendments to the Agreement:

 

a.

Section 1.2. Issuance and Sale of Warrants. the parties agree that all references to the exercise price of the Warrants shall be amended to reflect the exercise price in the Amended Warrants, and shall thus read $0.40.

 

b.

Section 4.3. Demand Registration of Restricted Stock. The parties agree that, upon conversion of any portion of the Amended and Restated Promissory Notes pursuant to their Article III, the limit set forth in Section 4.3.(a) that prevents demand registration from occurring more than once in each twelve-month period shall not be applicable as to demand registration of the securities issued pursuant to such conversion.

 

No Other Amendments. The Company and the Purchasers agree that this Amendment, the Amended and Restated Notes, and the Amended Warrants are being entered into pursuant to, and in compliance with, the provisions of Section 7.13 of the Agreement. The parties agree that other than as amended hereby, all terms of the Agreement, and the Security shall remain in full force and effect as set forth in the respective documents.

 

** Signature Page Follows **

 

 

Offering Document No.: _____

 

IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Amendment to be executed as of the date set forth below.

 

	Individual Purchasers:
	PURCHASER
Date: December 15, 2023
	Individual Purchasers:
	Name:
	Entity Purchasers:
	TCM Tactical Opportunities Fund II LP
	By:	/s/ Douglas Troob
		Name:	Douglas Troob
		Title:	Manager
	All Purchasers Complete:
	Address: 777 Westchester Avenue, Suite 203, White Plains, NY 10604
	TREES CORPORATION
	By:	/s/ Adam Hershey
		Name:	Adam Hershey
		Title:	Interim Chief Executive Officer

 

 

Offering Document No.: _____

 

Exhibit A – Form of Amended and Restated Notes

 

 

 

Exhibit 10.4

 

	Trees Corporation
	215 Union Boulevard, Suite 415
	Lakewood, CO 80228

 

December 15, 2023

 

TCM Tactical Opportunities Fund II LP
777 Westchester Avenue, Suite 203
White Plains, NY 10604

Attention: Peter Troob

 

Re:

TREES Corporation – Modification to Warrants

 

Dear Mr. Troob:

 

Reference is made to those certain warrants to purchase shares of common stock, par value $0.01 per share, of TREES Corporation, a Colorado corporation, presently held by TCM Tactical Opportunities Fund II LP and/or certain affiliates thereof (collectively, “TCM”), as more particularly set forth on Schedule A annexed hereto (“Warrants”). The purpose of this letter agreement is to amend certain terms of the Warrants as set forth herein, as follows:

 

1.

Exercise Price. The Exercise Price for all Warrants is hereby amended to be $0.40 per share.

 

2.

Expiration Date. The Expiration Date for all Warrants is hereby amended to be September 15, 2029.

 

3.

Remaining Terms. All remaining terms and conditions of the Warrants not otherwise amended pursuant to this letter agreement shall remain in full force and effect in accordance with their respective terms.

 

4.

Governing Law. This letter agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado (without giving effect to the conflict of laws principles thereof).

 

	Very truly yours, TREES Corporation
	By:	/s/ Adam Hershey
		Adam Hershey
		Interim Chief Executive Officer

 

Exhibit 10.5

 

 

 

December 15, 2023

 

TREES Corporation

215 Union Boulevard, Suite 415

Lakewood, CO 80228

 

Re:

TCM Tactical Opportunities Fund II LP — M&A Financing

 

Dear Sir/Madam:

 

Reference is made to those certain Amended and Restated Senior Secured Convertible Promissory Notes of even date herewith by and among TCM Tactical Opportunities Fund II LP, TREES Corporation (the “Company”), and certain other investors (the “Amended Notes”). As a condition to the Company issuing the Amended Notes, TCM and/or its affiliates or assigns hereby agree and covenant, subject to agreement on terms and conditions, that they will provide up to $500,000 in funding to the Company for future potential acquisitions (“M&A Financing”).

 

In respect thereof, the Company shall notify TCM prior to execution of any letter of intent in which the Company wishes to seek M&A Financing (“Potential Transaction”). If TCM and the Company agree to move forward with a Potential Transaction, and subject to agreement on terms and conditions for the M&A Financing, upon signing of the letter of intent, TCM shall, among other things, place in reserve the M&A Financing; work with the Company, as requested, to structure the Potential Transaction; and provide a commitment or ‘proof of funds’ letter to the prospective acquisition target. It is the intention of the parties that any M&A Financing be consummated on or prior to the one-year anniversary of the closing of the Amended Notes.

 

Nothing in this letter or otherwise shall prohibit or prevent the Company from entering into any transaction in its sole and absolute discretion without any consent or involvement of TCM if the Company is not seeking M&A Financing in connection therewith.

 

	Very truly yours,
	TCM Tactical Opportunities Fund II LP
	By:	/s/ Peter Troob
		Peter Troob
		Managing Partner

 

Troob Capital Management

777 Westchester Avenue, Suite 203

White Plains, NY 10604

info@troobcapital.com

v3.23.4

Cover	Dec. 15, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Dec. 15, 2023
Entity File Number	000-54457
Entity Registrant Name	TREES CORPORATION
Entity Central Index Key	0001477009
Entity Tax Identification Number	90-1072649
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	215 Union Boulevard
Entity Address, Address Line Two	Suite 415
Entity Address, City or Town	Lakewood
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80228
City Area Code	303
Local Phone Number	759-1300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false

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