Zoned Properties, Inc. (OTCMKTS:ZDPY) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.
Stock Redemption Agreement
Effective January 1, 2019, Zoned Properties, Inc. (the “Company”), Christopher Carra, Alan Abrams, Clayton Abrams Revocable Trust (the “Clayton Abrams Trust”), and Kyle Abrams Revocable Trust (the “Kyle Abrams Trust” and together with the Clayton Abrams Trust, the “Trusts”) entered into a Stock Redemption Agreement (the “Stock Redemption Agreement”). Prior to entry into the Stock Redemption Agreement, (i) Mr. Carra was the owner 2,028,335 shares of the Company’s common stock, representing approximately 11.6% of the Company’s outstanding shares as of January 1, 2019, and (ii) Mr. Abrams, together with the Trusts (collectively, the “Abrams Affiliates”), owned 3,611,669 shares of the Company’s common stock, representing approximately 20.7% of the Company’s outstanding common stock as of January 1, 2019. to Securities and Exchange Commission (the “SEC”) rules, each of Messrs. Carra and Abrams was deemed to be a “related person” due solely to their status as significant stockholders of the Company. to the terms of the Stock Redemption Agreement, the parties agreed that the Company would redeem an aggregate of 5,640,004 owned by Mr. Carra and the Abrams Affiliates (the “Stock Redemption”) such that Messrs. Carra and Abrams would no longer be significant and stockholders of the Company and would no longer be deemed to be “related persons” under SEC rules. In exchange for the Stock Redemption, the parties agreed that:
| ● | The Company, on behalf of Chino Valley Properties, LLC, a wholly owned subsidiary of the Company (“Chino Valley”), and Broken Arrow Herbal Center, Inc. (“Broken Arrow”), which is owned, in whole or in part, directly or indirectly, by Messrs. Abrams and Carra, will amend the Broken Arrow CASA (as defined below) to reduce the gross revenue fee payable by Broken Arrow from 10% of gross revenue to 0% of gross revenue, |
| ● | The Company, on behalf of Zoned Arizona Properties, LLC, a wholly owned subsidiary of the Company (“Zoned Arizona”), and CJK, Inc. (“CJK”), which is owned, in whole or in part, directly or indirectly, by Messrs. Abrams and Carra, will amend the CJK CASA (as defined below) to reduce the gross revenue fee payable by CJK from 10% of gross revenue to 0% of gross revenue, |
| ● | The Company and Mr. Abrams will amend the convertible debenture dated January 9, 2017 (the “Abrams Debenture”) to extend the maturity date of the Abrams Debenture from January 9, 2022 until January 9, 2030, and |
| ● | Chino Valley and Broken Arrow will amend the Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 (the “Chino Valley Lease”) to increase the monthly base rent payable by Broken Arrow from $35,000 to $40,000. |
Following effectiveness of the Stock Redemption and the transactions set forth above:
| ● | Messrs. Carra and Abrams will no longer beneficially own any shares of the Company’s common stock. Accordingly, they will no longer be significant stockholders of the Company or “related persons” under the SEC rules. |
| ● | Broken Arrow will continue to be owned, in whole or in part, directly or indirectly, by Messrs. Abrams and Carra, and Broken Arrow will continue to be a tenant of the Company. |
| ● | CJK will continue to be owned, in whole or in part, directly or indirectly, by Messrs. Abrams and Carra, and CJK will continue to be a tenant of the Company. |
| ● |
The Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Chino Valley and Broken Arrow will continue in full force and effect, except as amended by the Chino Valley Lease Amendment (as defined below) to increase the monthly base rent payable by Broken Arrow from $35,000 to $40,000. |
| ● | The Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Green Valley Properties, LLC, a wholly owned subsidiary of the Company (“Green Valley”), and Broken Arrow will continue in full force and effect. |
| ● | The Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement (concerning the Company’s Tempe, Arizona property) dated May 1, 2018 between Zoned Arizona and CJK will continue in full force and effect. |
| ● | The Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated May 1, 2018 between Kingman Property Group, LLC, a wholly owned subsidiary of the Company, and CJK will continue in full force and effect. |
The foregoing description of the Stock Redemption Agreement is not a complete description of all of the parties’ rights and obligations under the Stock Redemption Agreement, and is qualified in its entirety by reference to the Stock Redemption Agreement, a copy of which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated herein by reference.
Broken Arrow Confidential Advisory Services Agreement
On January 1, 2019, the Company, on behalf of Chino Valley, and Broken Arrow entered into the First Amendment to Confidential Advisory Services Agreement (the “Broken Arrow CASA Amendment”). The Broken Arrow CASA Amendment amended the Confidential Advisory Services Agreement by and between the Company and Broken Arrow (the “Broken Arrow CASA”) to (i) reduce the gross revenue fee payable by Broken Arrow from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by Broken Arrow.
Except as set forth herein, the terms of the Broken Arrow CASA remain in full force and effect.
The foregoing description of the Broken Arrow CASA Amendment is not a complete description of all of the parties’ rights and obligations under the Broken Arrow CASA Amendment, and is qualified in its entirety by reference to the Broken Arrow CASA Amendment, a copy of which is filed as Exhibit 10.2 to this current report on Form 8-K and incorporated herein by reference.
Amendment to CJK Confidential Advisory Services Agreement
On January 1, 2019, the Company, on behalf of Zoned Arizona, and CJK entered into the First Amendment to Confidential Advisory Services Agreement (the “CJK CASA Amendment”). The CJK CASA Amendment amended the Confidential Advisory Services Agreement by and between the Company and CJK (the “CJK CASA”) to (i) reduce the gross revenue fee payable by CJK from 10% to 0%, and (ii) add a $250 hourly advisory fee payable by CJK.
Except as set forth herein, the terms of the CJK CASA remain in full force and effect.
The foregoing description of the CJK CASA Amendment is not a complete description of all of the parties’ rights and obligations under the CJK CASA Amendment, and is qualified in its entirety by reference to the CJK CASA Amendment, a copy of which is filed as Exhibit 10.3 to this current report on Form 8-K and incorporated herein by reference.
Amendment to Abrams Convertible Debenture
On January 9, 2017, the Company issued the Abrams Debenture in the aggregate principal amount of $2,000,000 in favor of Mr. Abrams, in exchange for receipt from Mr. Abrams of $2,000,000. On January 2, 2019, the Company and Mr. Abrams entered into an amendment of the Abrams Debenture (the “Debenture Amendment”), to which the parties agreed to extend the maturity date of the Abrams Debenture from January 9, 2022 to January 9, 2030. Except as set forth herein, the terms of the Abrams Debenture remain in full force and effect.
The foregoing description of the Debenture Amendment is not a complete description of all of the parties’ rights and obligations under the Debenture Amendment and is qualified in its entirety by reference to the Debenture Amendment, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Chino Valley Lease Amendment
On January 1, 2019, Chino Valley and Broken Arrow entered into that the First Amendment to the Chino Valley Lease (the “Chino Valley Lease Amendment”), to which the monthly base rent was increased from $35,000 to $40,000. Except as set forth herein, the terms of the Chino Valley Lease Amendment remain in full force and effect.
The foregoing description of the Chino Valley Lease Amendment is not a complete description of all of the parties’ rights and obligations under the Chino Valley Lease Amendment, and is qualified in its entirety by reference to the Chino Valley Lease Amendment, a copy of which is filed as Exhibit 10.5, to this current report on Form 8-K and incorporated herein by reference.
Item 8.01. Other Events.
On January 3, 2019, the Company issued a press release announcing the Stock Redemption of 32.3% of its outstanding common stock into the Company’s treasury. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the website is not a part of this current report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
| 10.1 | Stock Redemption Agreement effective January 1, 2019 by and among Zoned Properties, Inc., Christopher Carra, Alan B. Abrams, Clayton Abrams Revocable Trust and Kyle Abrams Revocable Trust. |
| 10.2 | First Amendment to Confidential Advisory Services Agreement dated January 1, 2019 by and between Zoned Properties, Inc., on behalf of Chino Valley Properties, LLC and Broken Arrow Herbal Center, Inc. |
| 10.3 | First Amendment to Confidential Advisory Services Agreement dated January 1, 2019 by and between Zoned Properties, Inc., on behalf of Zoned Arizona Properties, LLC and CJK, Inc. |
| 10.4 | Amendment to Convertible Debenture entered into as of January 2, 2019 by and between Zoned Properties, Inc. and Alan Abrams. |
| 10.5 | First Amendment to Licensed Medical Marijuana Facility Triple Net (NNN) Lease Agreement dated January 1, 2019 by and between Chino Valley Properties, LLC and Broken Arrow Herbal Center, Inc. |
| 99.1 | Press Release of Zoned Properties, Inc. dated January 3, 2019. |
Zoned Properties, Inc. Exhibit
EX-10.1 2 f8k0119ex10-1_zoned.htm STOCK REDEMPTION AGREEMENT EFFECTIVE JANUARY 1,…
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About Zoned Properties, Inc. (OTCMKTS:ZDPY)
Zoned Properties, Inc. is a commercial property, project development and management services company. The Company is engaged in identifying, developing and managing properties in industries, including the licensed medical marijuana industry. The Company operates in the operating, leasing and managing commercial properties segment. The Company maintains a portfolio of properties that it owns, leases and manages. In addition, it provides direct consultation and support for the development of each property. Its development ranges from architectural design and build-out, utility installation, property management, facilities management and security systems. The Company’s property portfolio includes land and real property constructed in Green Valley, Arizona; land and real property in Kingman, Arizona; vacant land in Gilbert, Arizona; a multi-tenant industrial park in Tempe Arizona, and land and real property of approximately 50 acres in Chino Valley, Arizona.
