IDS Industries, Inc. $100,000 PROMISSORY NOTE Finkis Capital, LLC

 

 

January 22, 2014 $100,000 PROMISSORY NOTE

FOR VALUE RECEIVED, IDS Industries, Inc., a Nevada corporation (the "Borrower")
with at least 38,723,370 common shares issued and outstanding (as of January 9,
2014), promises to pay to Finiks Capital, LLC or its Assignees (the "Lender")
the Principal Sum along with the Interest Rate and any other fees according to
the terms herein. This Note will become effective only upon execution by both
parties and delivery of the first payment of Consideration by the Lender (the
"Effective Date").

The Principal Sum is $100,000 (one hundred thousand) plus accrued and unpaid
interest and any other fees. The Consideration is $90,000 (ninety thousand)
payable by wire (there exists a $10,000 original issue discount (the "OID") .
The Lender shall pay $20,000 of Consideration upon closing of this Note. The
Lender may pay additional Consideration to the Borrower in such amounts and at
such dates as Lender may choose in its sole discretion. THE PRINCIPAL SUM DUE TO
LENDER SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY LENDER
(PLUS AN APPROXIMATE 10% ORIGINAL ISSUE DISCOUNT THAT IS PRORATED BASED ON THE
CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER INTEREST OR FEES)
SUCH THAT THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED AND THE
BORROWER IS NOT REQUIRED TO REPAY ANY UNFUNDED PORTION OF THIS NOTE. The
Maturity Date is one

hundred and eighty days from the Effective Date of each payment (the "Maturity
Date") and is the date upon which the Principal Sum of this Note, as well as any
unpaid interest and other fees, shall be due and payable. The Conversion Price
is 51% of the average of the three (3) lowest bid side price in the ten (10)
trading days previous to the conversion , with a maximum conversion price of
four ($0.04) cents (In the case that conversion shares are not deliverable by
DWAC an additional 10% discount will apply,

however, while we would like to see you become DWAC eligible, since you are not
currently, we will not apply this penalty; and if the shares are ineligible for
deposit into the DTC system and only eligible for Xclearing deposit an
additional 5% discount shall apply; as we understand, you currently are DTC
Eligible and if you were to lose that eligibility, this penalty will apply) .
Unless otherwise agreed in writing by both parties, at no time will the Lender
convert any amount of the Note into common stock that would result in the Lender
owning more than 4.99% of the common stock outstanding.

1.      ZERO Percent Interest for the First Three Months. The Borrower may repay
this Note at any time on or before 90 days from the Effective Date, after which
the Borrower may not make further payments on this Note prior to the Maturity
Date without written approval from Lender. If the Borrower repays the Note on or
before 90 days from the Effective Date, the Interest Rate shall be ZERO PERCENT
(0%). If Borrower does not repay the Note on or before 90 days from the
Effective Date, a one-time Interest charge of 10% shall be applied to the
Principal Sum. Any interest payable is in addition to the OID, and that OID (or
prorated OID, if applicable) remains payable regardless of time and manner of
payment by Borrower.

2.      Conversion. The Lender has the right, at any time after the Effective
Date, at its election, to convert all or part of the outstanding and unpaid
Principal Sum and accrued interest (and any other fees) into shares of fully
paid and non-assessable shares of common stock of the Borrower as per this
conversion formula: Number of shares receivable upon conversion equals the
dollar conversion amount divided by the Conversion Price. Conversions may be
delivered to Borrower by method of Lender's choice (including but not limited to
email, facsimile , mail, overnight courier, or personal delivery) , and all
conversions shall be cashless and not require further payment from the Lender.
If no objection is delivered from Borrower to Lender regarding any variable or
calculation of the conversion notice within 24 hours of delivery of the
conversion notice, the Borrower shall have been thereafter deemed to have
irrevocably confirmed and irrevocably ratified such notice of conversion and
waived any objection thereto. The Borrower shall deliver the shares from any
conversion to Lender (in any name directed by Lender) within 3 (three) business
days of conversion notice delivery.

3.      Conversion Delays. If Borrower fails to deliver shares in accordance
with the timeframe stated in Section 2 , Lender, at any time prior to selling
all of those shares, may rescind any portion, in whole or in part, of that
particular conversion attributable to the unsold shares and have the rescinded
conversion amount returned to the Principal Sum with the rescinded conversion
shares returned to the Borrower (under Lender's and Borrower's expectations that
any returned conversion amounts will tack back to the original date of the
Note). In addition , for each conversion, in the event that shares are not
delivered by the fourth business day (inclusive of the day of conversion), a
penalty of $2,000 per day will be assessed for each day after the third business
day (inclusive of the day of the conversion) until share delivery is made; and
such penalty will be added to the Principal Sum of the Note (under Lender's and
Borrower's expectations that any penalty amounts will tack back to the original
date of the Note).

4.        Reservation of Shares. At all times during which this Note is
convertible, the Borrower will reserve from its authorized and unissued Common
Stock to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower will at all times reserve at least 5,000,000 shares of
Common Stock for conversion.

5. Piggyback Registration Rights. The Borrower shall include on the next
registration statement the Borrower files with SEC (or on the subsequent
registration statement if such registration statement is withdrawn) all shares
issuable upon conversion of this Note. Failure to do so will result in
liquidated damages of 25% of the outstanding principal balance of this Note, but
not less than $25,000, being immediately due and payable to the Lender at its
election in the form of cash payment or addition to the balance of this Note.

6.       This Section Left Intentionally Blank.

 

 

7.       Default. The following are events of default under this Note: (i) the
Borrower shall fail to pay any principal under the Note when due and payable (or
payable by conversion) thereunder; or (ii) the Borrower shall fail to pay any
interest or any other amount under the Note when due and payable (or payable by
conversion) thereunder ; or (iii) a receiver, trustee or other similar official
shall be appointed over the Borrower or a material part of its assets and such
appointment shall remain uncontested for twenty (20) days or shall not be
dismissed or discharged within sixty (60) days ; or (iv) the Borrower shall
become insolvent or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due, subject to applicable grace periods, if
any; or (v) the Borrower shall make a general assignment for the benefit of
creditors; or (vi) the Borrower shall file a petition for relief under any
bankruptcy ,

Interest free if paid in full within 3 months

IDST insolvency or similar law (domestic or foreign); or (vii) an involuntary
proceeding shall be commenced or filed against the Borrower; or (viii) the
Borrower shall lose its status as " OTC Eligible" or the borrower's shareholders
shall lose the ability to deposit (either electronically or by physical
certificates, or otherwise) shares into the OTC System; or (ix) the Borrower
shall become delinquent in its filing requirements as a fully-reporting issuer
registered with the SEC.

8.       Remedies. In the event of any default, the outstanding principal amount
of this Note, plus accrued but unpaid interest, liquidated damages, fees and
other amounts owing in respect thereof through the date of acceleration, shall
become, at the Lender's election, immediately due and payable in cash at the
Mandatory Default Amount. The Mandatory Default Amount means the greater of (i)
the outstanding principal amount of this Note, plus all accrued and unpaid
interest, liquidated damages, fees and other amounts hereon , divided by the
Conversion Price on the date the Mandatory Default Amount is either demanded or
paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on
the date the Mandatory Default Amount is either demanded or paid in full,
whichever has a higher VWAP , or (ii) 150% of the outstanding principal amount
of this Note, plus 100% of accrued and unpaid interest, liquidated damages ,
fees and other amounts hereon. Commencing five (5) days after the occurrence of
any event of default that results in the eventual acceleration of this Note, the
interest rate on this Note shall accrue at an interest rate equal to at least
18% per annum or the maximum rate permitted under applicable law. In connection
with such acceleration described herein, the Lender need not provide, and the
Borrower hereby waives , any presentment, demand, protest or other notice of any
kind, and the Lender may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such acceleration may be rescinded and
annulled by Lender at any time prior to payment hereunder and the Lender shall
have all rights as a holder of the note until such time, if any, as the Lender
receives full payment pursuant to this Section 8. No such rescission or
annulment shall affect any subsequent event of default or impair any right
consequent thereon. Nothing herein shall limit Lender's right to pursue any
other remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Borrower's failure to timely deliver certificates representing
shares of Common Stock upon conversion of the Note as required pursuant to the
terms hereof.

9.      No Shorting. Lender agrees that so long as this Note from Borrower to
Lender remains outstanding, Lender will not enter into or effect "short sales"
of the Common Stock or hedging transaction which establishes a net short
position with respect to the Common Stock of Borrower. Borrower acknowledges and
agrees that upon delivery of a conversion notice by Lender, Lender immediately
owns the shares of Common Stock described in the conversion notice and any sale
of those shares issuable under such conversion notice would not be considered
short sales.

10.        Assignability. The Borrower may not assign this Note. This Note will
be binding upon the Borrower and its successors and will inure to the benefit of
the Lender and its successors and assigns and may be assigned by the Lender to
anyone of its choosing without Borrower's approval.

11.        Governing Law. This Note will be governed by, and construed and
enforced in accordance with, the laws of the State of California, without regard
to the conflict of laws principles thereof. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of California or in the federal courts
located in Orange County, in the State of California. Both parties and the
individuals signing this Agreement agree to submit to the jurisdiction of such
courts .

12.        Delivery of Process by Lender to Borrower. In the event of any action
or proceeding by Lender against Borrower, and only by Lender against Borrower,
service of copies of summons and/or complaint and/or any other process which may
be served in any such action or proceeding may be made by Lender via U.S. Mail,
overnight delivery service such as FedEx or UPS, email, fax, or process server,
or by mailing or otherwise delivering a copy of such process to the Borrower at
its last known attorney as set forth in its most recent SEC filing.

13.       Attorney Fees. In the event any attorney is employed by either party
to this Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute , breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred , in addition to any other relief to which the
prevailing party may be entitled.

14.       Opinion of Counsel. In the event that an opinion of counsel is needed
for any matter related to this Note, Lender has the right to have any such
opinion provided by its counsel. Lender also has the right to have any such
opinion provided by Borrower's counsel.

15.       Notices. Any notice required or permitted hereunder (including
Conversion Notices) must be in writing and either personally served, sent by
facsimile or email transmission, or sent by overnight courier. Notices will be
deemed effectively delivered at the time of transmission if by facsimile or
email, and if by overnight courier the business day after such notice is
deposited with the courier service for delivery.

  

Borrower: Lender /s/ Stephen Scott Plantinga Stephen Scott Plantinga – CEO IDS
Industries, Inc.   /s/ James P. Hodgins James P. Hodgins – Managing Member
Finiks Capital, LLC

 

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