Document:

inqd_ex101.htm

EXHIBIT 10.1

 

Contractual Joint Venture Agreement

 

This Contractual Joint Venture Agreement (the “Agreement”) is by and between the parties listed below.

 

Effective Date of the Agreement: March 23, 2017.

 

Parties:

 

Vyripharm Enterprises, L.L.C., a.k.a. Vyripharm Biopharmaceutical: (hereinafter “Vyripharm”). Address: 2450 Holcombe Blvd., Suite 230, Houston, Texas 77021.

 

Alamo CBD, LLC, and its affiliates: (hereinafter “Alamo CBD”). Address: PO Box #581, Schertz, Texas 77154.

 

Indoor Harvest Corp, a.ka. Indoor Harvest: (hereinafter "Indoor Harvest"). Address: 5300 East Freeway, Suite A, Houston, Texas 77020.

 

Vyripharm , Alamo CBD and Indoor Harvest are hereinafter, collectively, referred to as the “Parties” or “Joint Venturers”, and, individually, as a “Party” or “Joint Venturer”.

 

Purpose of This Agreement: The purpose of this Agreement is to establish a joint venture between the Parties (the “Joint Venture”):

 

Recitals

 

WHEREAS, each Party has agreed to participate in an unincorporated joint venture to carry out the business purposes set forth in this Agreement including the Joint Venture Summary and Supplement;

 

WHEREAS, the Parties propose to commit capital moneys and regulate their mutual rights and liabilities as participating parties, as well as the management and business activity of the Joint Venture, upon and subject to the provisions of this Agreement; 

 

WHEREAS, Vyripharm has reformulated the use of its In-Situ Hydrogel, N4 Technology and Oligosaccharide (Dual Agent) Technology (collectively, the “Vyripharm Technologies”) to develop applications in combination with medical cannabinoids for nuclear imaging and therapy for neurologic disorders including, but not limited to, post-traumatic stress disorder ("PTSD"), chronic pain, epilepsy and other acute/chronic disorders, such as cancer, metabolic disorders, and microbiome;

 

WHEREAS, the Vyripharm Technologies have extensive patent protection;

 

WHEREAS, Vyripharm is working on preparing new patent applications to protect its novel compounds that focus on medical cannabinoids (synthetic/natural); 

 

	 
	
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WHEREAS, Vyripharm has entered into sponsored research agreements with the University of Texas Medical Branch Galveston, The University of Texas Health Science Center at Houston – Institute of Molecular Medicine and The University of Texas M.D. Anderson Cancer Center; 

 

WHEREAS, there is also an agreement between Vyripharm and the National Institute of Drug Abuse, together with pending agreements with Baylor College of Medicine and the VA Hospital in Houston, Texas which the Parties expect will enhance the purposes of the Joint Venture; 

 

WHEREAS, Indoor Harvest has developed patent pending cannabis cultivation technology to be used in the Joint Venture to develop specific intellectual property and research into the development of specific chemical expression profiles and will provide Design-Build services to Alamo CBD in the construction of its cannabis oil production facility under the Texas Compassionate Use Program.

 

WHEREAS, Alamo CBD proposes to provide to Vyripharm, as may be permitted by law and prospective licensure with appropriate state and federal agencies, medical grade cannabis oil/product; 

 

WHEREAS, on January 3, 2017, Alamo CBD and Indoor Harvest, Corp (“IHI”) announced their intent to form a combination of their cannabis related assets for the purpose of exploiting the rapid growth in medical cannabis;

 

WHEREAS, the proposed combination between Alamo CBD and IHI will require certain conditions precedent to take place including shareholder approval and the separation by IHI of its agriculture related assets in vertical farming;

 

WHEREAS, in the event that the combination between Alamo CBD and IHI does not take place Alamo CBD and IHI wish to explore opportunities to joint venture as individual entities, within the Joint Venture group to help enhance the Joint Venturers’ operational ability and physical facility development to accommodate the research and development related to the purpose of the Joint Venture; and

 

WHEREAS, The Joint Venturers confirm to one another that they are in agreement with, and will comply with the statements made in the document entitled “Confirmation of No Illegal Purpose”, attached hereto as Exhibit “A”, it is

 

NOW, THEREFORE, AGREED BY THE PARTIES, as follows:

 

	1.	Business of the Joint Venture: The Parties hereby establish a contractual Joint Venture to:

 

	
 
	
a.
	Enhance the ability of Alamo CBD to apply for and obtain licensure, or a permit, as the case may be:

 

	
 
	
i.
	In Texas, pursuant to the Texas Compassionate Use Act, as may be amended;

 

	 
	
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ii.
	In Colorado, pursuant to recent Colorado legislation permitting foreign ownership of entities that grow and/or dispense marijuana products for medical and/or consumer use; and
	
 
	
 
	
 

	
 
	
iii.
	Pursuant to recent United States Drug Enforcement Administration regulations which expand the opportunities for entities providing research involving marijuana and its chemical constituents, as referenced in 21 U.S.C. 822(a)(1) and 21 U.S.C. 823(a), et. seq.

 

	
 
	
b.
	Establish Alamo CBD as a supplier of a variety of medical use cannabis oil to Vyripharm for Vyripharm’s use in conducting research and development to create novel pharmaceutical and radiopharmaceutical compounds designed to image and treat certain debilitating diseases including, but not limited to epilepsy, post-traumatic stress disorder, Alzheimer’s, ALS, and other neurodegenerative diseases.
	
 
	
 
	
 

	
 
	
c.
	Establish IHI as the project developer and engineering, procurement and construction group, in which IHI is responsible for costs and efforts related to Alamo CBD's efforts to become licensed under the Texas Compassionate Use Act and to meet its obligations under this Joint Venture agreement.

 

	2.	Term: The “Initial Term” of the Joint Venture shall be five (5) years following the Effective Date. This Agreement may be extended beyond the Initial Term by mutual consent of the Parties.
	
 
	
 

	3.	Contractual Relationship: The Joint Venture is a contractual Joint Venture. Each Party acts in the capacity of an independent contractor in the performance of this Agreement or any liability under this Agreement. This Agreement does not create, and must not be construed to create, an express or implied relationship between the Parties in respect to: (i) employment; (ii) principal and agency; or (iii) partnership.
	
 
	
 

	4.	Contractual Freedom: This Agreement does not prohibit any Party from executing any agreement with any third person relating to any business activity, project or joint venture, whether in the nature of or similar to the Joint Venture or otherwise, as decided by that Party, subject to compliance with any liability of that Party under any other provision of this Agreement.
	
 
	
 

	5.	Consideration and Costs of Operation: IHI shall contribute a total of $5,000,000 on the basis of $1,000,000 per year for each of the first five (5) years of the Initial Term. The first payment of $1,000,000 shall be paid to Vyripharm as set forth in Note 1, below no later than four (4) days following the Effective Date, and the remaining four (4) annual payments shall be paid by IHI to Vyripharm on each of the following one (1) year anniversaries of the Effective Date. If IHI should fail to timely pay the initial $1,000,000 as set forth above, this Agreement shall terminate and neither Party shall have further obligation to the other. If IHI should fail to pay the second $1,000,000 payment within thirty (30) days following the second anniversary of the Effective Date, then this Agreement shall terminate and Alamo CBD shall forfeit four-fifths (4/5) of its revenue share as set forth in Paragraph 7 from any product that has been developed or is subsequently developed by Vyripharm which uses cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the third $1,000,000 payment within thirty (30) days following the third anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit three-fifths (3/5) of its revenue share as set forth in Paragraph 7 from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fourth $1,000,000 payment within thirty (30) days following the fourth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit four-fifths (2/5) of its revenue share as set forth in Paragraph 7 from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. If IHI should fail to pay the fifth $1,000,000 payment within thirty (30) days following the fifth anniversary of the Effective Date, then this Agreement shall terminate and IHI shall forfeit one-fifth (1/5) of its revenue share as set forth in Paragraph 7 from any product that has been developed or is subsequently developed by Vyripharm which uses medical cannabis oil or processes supplied to Vyripharm by IHI. With the exception of cost sharing for the filing of, prosecuting and maintaining any joint patent applications pursuant to Paragraph 6 of this Agreement, and unless the Parties mutually agree, IHI shall have no further financial obligations under this Agreement during the Initial Term. The Parties shall otherwise bear their own costs in carrying out their respective responsibilities under this Agreement.

 

	 
	
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	6.	Note1: Due to the Fees and schedule that Vyripharm must attained with the institutions in the TMC the only pay out structure that we can approve is the following: The first $1,000,000 shall be paid as follow: Option 1) Upfront all the $1,000,000.00 for the year if excess funds are raised (Over the $10,250,000), Option 2) 5% of funds up to $10,250,000, which are raised from presentations to investors in which Vyripharm participates; Option 3) if less than $10,250,000 is raised in 2017, then IHI will/should make a $250,000 down payment to Vyripharm, and pay another $250,000 at the end of the 2nd quarter of 2017. If IHI does not have the funds to pay another $250,000 in the 3rd quarter of 2017, then that payment can be pushed back to the 4th quarter with the final payment of $500,000 owed to Vyripharm in or at the end of the 4th quarter of 2017. 

 

	7.	Intellectual Property: Vyripharm believes it is possible to create new intellectual property utilizing its proprietary platform technologies in conjunction with Alamo CBD’s strains of medical cannabinoil and IHI's patent pending high pressure aeroponic system. Any patent application that is originated by Vyripharm that specifically uses Alamo CBD’s cannabis oil, or IHI's aeroponic process, as licensed to Alamo CBD, as part of the invention shall list Alamo CBD and IHI as additional inventors. The cost to prepare and file, prosecute and maintain any such patent application, shall be shared between Vyripharm and Alamo CBD 85%/15% unless the combination between Alamo CBD and IHI is not consummated, at which time Vyripharm, Alamo CBD and IHI will shares costs 85%/7.5%/7.5% respectively. Vyripharm shall invoice Alamo CBD and IHI for its share of the patent costs. Each invoice shall contain support justifying the request for payment which often will be in the form of copies of invoices from the patent lawyers working the patent case or proof of payment of fees paid to the United States Patent and Trademark Office and similar agency offices in countries outside the United States to the extent Patent applications are filed outside the United States. If Alamo CBD or IHI should fail to pay its obligation on any invoice when due in accordance with its terms and is not able to work out an arrangement with Vyripharm concerning such failure to pay the invoice, Alamo CBD and IHI shall forfeit its ownership interest in such patent or pending patent application and forthwith execute an assignment of its interest in such patent or patent application to Vyripharm.

 

	 
	
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	7a.	Accounting Sharing: Vyripharm shall hire an independent contractor, an account management firm to managed The Joint Venture Project. This will be an 85%/15% shared cost.
	
 
	
 

	7b.	Revenue Sharing: Vyripharm shall share all revenue from the licensure or the sale of any product developed by Vyripharm which utilizes medical cannabis oil or processes supplied by Alamo CBD and IHI under this Agreement. All such revenue shall be shared between Vyripharm and Alamo CBD 85%/15% respectively, unless the combination with Alamo CBD and IHI is not consummated, in such case revenue shall be shared 85%/7.5%/7.5% respectively. Once Vyripharm begins receiving revenue under this Paragraph 7, it shall make the appropriate distributions to Alamo CBD and IHI on a calendar quarterly basis thereafter. Each distribution shall be made by Vyripharm to Alamo CBD and IHI within fifteen (15) days following the last day of each calendar quarter.
	
 
	
 

	8.	Management Committee: Vyripharm shall appoint two (2) members to the “Management Committee” and Alamo shall appoint one (1) member to the Management Committee. For Vyripharm, Jerry Bryant shall be the Chairman of the Management Committee unless Mr. Bryant should elect to appoint the second Vyripharm member as the Chairman. The Management Committee shall meet in person two (2) times each year and telephonically two (2) times each year. Meetings shall take place quarterly and in-person meeting shall occur every other meeting. If Alamo CBD wishes to add items to the meeting agenda, then Alamo CBD shall submit such changes to Vyripharm within one (1) week of receiving Vyripharm’s proposed agenda. The purpose of each meeting is to summarize activities during the previous quarter regarding the Joint Venture and address projected work for the next quarter. The Parties shall endeavor, in good faith, to reach consensus regarding work planned for the following quarter in deference to achieving the goals of the Joint Venture. If agreement cannot be reached, then the decision of the Chairman shall be conclusive regarding the matter requiring decision.
	
 
	
 

	9.	Exclusivity: During the term of the Joint Venture, the Parties agree to work exclusively with one another with respect to any purpose related, directly or in directly, to the purpose of the Joint Venture.
	
 
	
 

	10.	Confidentiality: The Parties acknowledge and agree that this Agreement is not for distribution to any third-party who does not execute a confidentiality and non-disclosure agreement in a form acceptable to the Joint Venturers. Furthermore, the Parties acknowledge and agree that each Party possesses and handles information that such Party deems confidential. Each Party shall therefore identify to the other Party such information that the disclosing Party considers confidential. It shall be incumbent on the other Party to use all reasonable means to safeguard the confidentiality of such information to at least the extent that it would safeguard its own confidential information.
	
 
	
 

	11.	Press Releases: The Parties agree that no information release to the news press regarding the Joint Venture and its business shall be made unless the Parties have acknowledged approval of the press release.
	
 
	
 

	12.	Compliance with Law: The Parties acknowledge the importance of maintaining full compliance with State and Federal law regarding the growing, harvesting, distributing, storing, and handling medical cannabis for research in keeping with the objectives of the Joint Venture. To that end, the Parties shall comply, to the fullest extent possible with all State and Federal rules, regulations and laws as they may apply to medical cannabis.

 
	 
	
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Miscellaneous Provisions:

 

	
 
	
a.
	Venue and Applicable Law: If any dispute arises between the Parties with respect to the enforcement, interpretation or construction of this Agreement (a “Dispute”), the Parties agree that (a) the sole and exclusive venue for any such Dispute shall be in Bexar County, Texas, and (b) the applicable law shall be the law of the State of Texas without reference to its choice of law or conflict of law principles.

 

	
 
	
i.
	Mediation. The Parties agree that, as a condition to arbitration, they will engage in at least one day of mediation, with a mutually agreed mediator, the cost of which shall be shared 50-50 by the Parties. If the Parties cannot agree on the selection of a mediator, the selection shall be made by the Presiding Judge of the Third Judicial Administrative District of the State of Texas upon application.
	
 
	
 
	
 

	
 
	
ii.
	Arbitration and Recovery of Expenses and Attorney’s Fees. In the event of any Dispute, the Parties agree to subject themselves exclusively and irrevocably to dispute resolution by arbitration before a panel of one arbitrator associated with Conflict Solutions of Texas LLC (http://www.csoftx.com, 6223 IH-10 West, San Antonio, Texas 78201), and according to the rules of arbitration of Conflict Solutions of Texas LLC. The cost of such arbitration shall be split 50-50 between the Parties. The Parties shall select the arbitrator by mutual agreement. If the Parties cannot agree on the selection of an arbitrator, the selection shall be made by request of either Party to the Presiding Judge of the Third Judicial Administrative District who shall make the appointment. The Parties agree that the sole and exclusive venue for any dispute shall be in Bexar County, Texas. The prevailing party in any arbitration shall be entitled to recover its reasonable costs and expenses, including reasonable expert witness and attorney’s fees. If the Parties cannot agree on the selection of an arbitrator from the list of arbitrators provided by Conflict Solutions of Texas LLC, the selection shall be made by Conflict Solutions of Texas LLC.

 

	
 
	
b.
	Complete Agreement, No Oral Changes, No Previous Inducements or Duress: This Agreement constitutes the entire agreement between the Parties. This Agreement supersedes all prior communications, promises, representations, inducements or agreements between the Parties, oral or written, related to the subject matter of this Agreement.
	
 
	
 
	
 

	
 
	
c.
	Amendment, Waiver of Any Claim of Oral Agreements: As part of the specific consideration given by each Party for this Agreement:

 

	
 
	
i.
	The Parties agree that any amendment, modification, rescission of, or any change to this Agreement (collectively, an “Amendment to the Agreement”) is valid only if such Amendment to the Agreement is made in writing in a document signed by each Party or signed by a duly authorized representative of such Party as may be a business organization.
	
 
	
 
	
 

	
 
	
ii.
	The Parties agree that any purported oral Amendment to the Agreement that is made, or alleged to be made, by any or all, Parties, is invalid.
	
 
	
 
	
 

	
 
	
iii.
	The Parties agree to waive any argument, claim or defense that any oral Amendment to the Agreement is valid or effective in any way.

 

	 
	
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d.
	No Reliance on Prior Inducements: The Parties acknowledge to one another, and agree, that neither of them has entered into, or signed, this Agreement as a result of any promise, representation or inducement made by any person, other than as stated in this Agreement (collectively an “Inducement”), and the Parties hereby agree that they have not relied on any Inducement and waive any claim, argument or defense that there has been any such Inducement.
	
 
	
 
	
 

	
 
	
e.
	No Handicap, Disability or Duress: The Parties mutually represent and warrant to one another that:

 

	
 
	
i.
	They are under no disability, handicap or impairment of any kind and that they execute this Agreement of their own free will, and

 

	
 
	
f.
	They are under no duress, nor any undue influence from any person or circumstance, in connection with entering into and executing this Agreement. Assumption of Risk: The Parties hereto acknowledge that there is a risk that subsequent to the execution of this Agreement they may discover, incur or suffer from, unknown or unanticipated claims which arise from, are based upon, or are related to the acts, facts, transactions or occurrences described above and which, if known by them on the date this Agreement was executed, may have materially affected their decision to execute this Agreement (collectively, the “Unanticipated Claims”). The Parties hereto acknowledge that they are assuming the risk of the Unanticipated Claims and agree that this Agreement applies to all Unanticipated Claims. Conditioned upon compliance with all the other terms of this Agreement, the Parties hereto expressly waive the benefits of any statutory provision or common law rule that provides, in sum or substance, that a release does not extend to claims which the party does not know or suspect to exist in its favor at the time of executing the release, which if known to the Party, would have materially affected the Party’s decision to settle with, or to release claims against any other Party.
	
 
	
 
	
 

	
 
	
g.
	Risk of Mistakes: In entering and making this Agreement, the Parties assume the risk of any mistake of law or fact. If the Parties should later discover that any fact they relied upon in entering this Agreement is not true or that their understanding of the facts or law was incorrect, no Party shall be entitled to seek rescission of this Agreement by reason thereof. This Agreement is intended to be final and binding upon the parties regardless of any mistake of fact or law.
	
 
	
 
	
 

	
 
	
h.
	Benefit of Agreement: The Parties agree that this Agreement inures to their benefit, and to the benefit of their heirs, successors, representatives and assigns.
	
 
	
 
	
 

	
 
	
i.
	Gender and Number: When the context requires, singular nouns and pronouns include the plural. The feminine, masculine and neuter genders refer to one another as is reasonably required by the context.
	
 
	
 
	
 

	
 
	
j.
	Headings: The headings and captions in this Agreement are for convenience only and are not to be used in the interpretation of this Agreement.
	
 
	
 
	
 

	
 
	
k.
	Confirmation Of No Illegal Purpose. Each Party agrees to execute an individual copy of the document titled “Confirmation Of No Illegal Purpose”, attached hereto as Exhibit “A”, which shall become an integral part of this Agreement

 

	 
	
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l.
	Notice. Where official notice is required, notice to the other Party shall be deemed given if sent via (1) electronic email with receipt confirmation, or (2) first class mail with return receipt.

 

If to Vyripharm Enterprises, LLC:

 

Address: 2450 Holcombe Blvd., Suite 230, Houston, Texas 77021. 

 

Email Address: jerry.bryant@vyripharm.com

 

Phone: 832-549-9612

 

Email Address: elias.jackson@vyripharm.com

 

If to Alamo CBD, LLC:

 

Address: PO Box #581, Schertz, Texas 77154

 

Email Address: lang@alamocbd.com

 

Phone: 210-878-7011

 

If to Indoor Harvest Corp

 

Address: 5300 East Freeway, Suite A, Houston, Texas 77020

 

Email Address: ccsykes@indoorharvest.com

 

Phone: 713-410-7903

 

The Parties to this Agreement have, read, understood and agreed to all of the terms of this Agreement, and understand that they have the right and opportunity to review this Agreement with the counsel of their choice and have either done so or have waived that right.

 

	Vyripharm Enterprises, LLC	
	 	 	 
	By:		
	
Name: 
	Jerry Bryant	 
	
Title:
	President	 
	Date:		 

 

	
Alamo CBD, LLC
	
	 	 	 
	By:		
	
Name: 
	Dr. Lang Coleman 	 
	Title:	Manager	 
	Date: 		 

 

	 
	
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Indoor Harvest Corp
	
	 	 	 
	By:		
	
Name: 
	Chad Sykes 	 
	Title: 	CINO	 
	Date:	 	 

 

Exhibit “A”

Confirmation of No Illegal Purpose

 

By executing this Confirmation of No Illegal Purpose (the “Confirmation”), the undersigned acknowledges, agrees and confirms to Vyripharm Enterprises, L.L.C.: (“Vyripharm”) Alamo CBD, LLC (“Alamo CBD”) and Indoor Harvest Corp ("Indoor Harvest"), and to all other third-parties who/which execute this Confirmation, that:

 

(a) The undersigned acknowledges and agrees that it is the undersigned’s understanding that it is the specific purpose and intention of the undersigned, Vyripharm, Alamo CBD and Indoor Harvest, and the purpose and intention of the Joint Venture Agreement by and between Vyripharm, Alamo CBD and Indoor Harvest (the “Joint Venture Agreement”), and the purpose and intention of any agreement by and between the undersigned, Vyripharm, Alamo CBD, Indoor Harvest and any person or entity who executes this Confirmation, or a similar confirmation (a “Third-Party Agreement”), to fully comply with all state and federal law, and any laws or regulations applicable to the Joint Venture Agreement or any Third-Party Agreement, the purpose of such agreements, and

 

(b) Any reference in the Joint Venture Agreement or any Third-Party Agreement to any activity or conduct which is not in compliance with any law or regulation is intended, and is, and shall be construed, as a reference to activity or conduct in which the Parties may engage once such activities and/or conduct are permissible under law and all applicable regulations, and after all relevant parties have obtained such permits and/or licenses which permit them to engage in such activities or conduct.

 

By signing below, the undersigned agrees that it has reviewed any relevant agreements with the attorneys of the undersigned’s choice, or has waived that right, and that the undersigned has read and understood all the terms of any relevant agreements.

 

AGREED:

 

	
Entity or Person: Alamo CBD
	 	Entity or Person: Indoor Harvest Corp 	 
	
 
	
 
	
 
	
 
	
 
	
 

	
By: 
		 	By:		 
	
Name: 
	Lang Coleman	 	Name: 	Chad Sykes	 
	
Title 
	CEO	 	
Title 
	CINO	 
	
Date: 
	
 
	
 
	
Date: 
	
 
	
 

 

 

	
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EXHIBIT 10.2

 

Note: March 22, 2017

 

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 

 

THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL SUM REPRESENTED BY THIS NOTE MAY BE LESS THAN THE PRINCIPAL SUM AND ACCRUED INTEREST SET FORTH BELOW.

 

8% FIXED CONVERTIBLE PROMISSORY NOTE 

 

OF

 

INDOOR HARVEST CORP.

 

Issuance Date: March 22, 2017

Total Face Value of Note: $550,000

Initial Consideration: $250,000

Initial Original Issue Discount: $25,000

Initial Principal Sum Due: $275,000

 

This Note is a duly authorized Fixed Convertible Promissory Note of Indoor Harvest Corp. a corporation duly organized and existing under the laws of the State of Texas (the “Company”), designated as the Company's 8% Fixed Convertible Promissory Note in the principal amount of $550,000 (the “Note”). This Note will become effective only upon execution by both parties and delivery of the first payment of consideration by the Holder (the “Effective Date”).

 

For Value Received, the Company hereby promises to pay to the order of Tangiers Global, LLC or its registered assigns or successors-in-interest (the “Holder”) the Principal Sum of $550,000 (the “Principal Sum”) and to pay “guaranteed” interest on the principal balance hereof at an amount equivalent to 8% of the Principal Sum, to the extent such Principal Sum and “guaranteed” interest and any other interest, fees, liquidated damages and/or items due to Holder herein have not been repaid or converted into the Company's Common Stock (the “Common Stock”), in accordance with the terms hereof. Upon the execution of this Note the sum of $250,000 shall be remitted and delivered to the Company, and $25,000 shall be retained by the Purchaser through an original issue discount (the “OID”) for due diligence and legal bills related to this transaction. The OID is set at 10% of any consideration paid. The Holder may pay additional Consideration to the Company in such amounts and at such dates (each, an “Additional Consideration Date”) as Holder may choose in its sole discretion. The Principal Sum due to Holder shall be prorated based on the Consideration actually paid by Holder (plus the “guaranteed” interest and 10% OID, both which are prorated based on the Consideration actually paid by the Holder, as well as any other interest or fees) such that the Company is only required to repay the amount funded and the Company is not required to repay any unfunded portion of this Note. The Maturity Date is eight months 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. 

 

	 
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In addition to the “guaranteed” interest referenced above, and in the Event of Default pursuant to Section 2.00(a), additional interest will accrue from the date of the Event of Default at the rate equal to the lower of 18% per annum or the highest rate permitted by law (the “Default Rate”). 

 

This Note will become effective only upon the execution by both parties, including the execution of Exhibits B, C, D and E and the Irrevocable Transfer Agent Instructions (the “Date of Execution”) and delivery of the initial payment of consideration by the Holder (the “Effective Date”).

 

This Note may be prepaid by the Company, in whole or in part, according to the following schedule:

 

	
Days Since Effective Date

 
	
Prepayment Amount

	
Under 90

 
	
115% of Principal Amount

	
91-135

 
	
120% of Principal Amount

	
136-180

 
	
125% of Principal Amount

 

After 180 days from the Effective Date this Note may not be prepaid without written consent from Holder, which consent may be withheld, delayed or denied in Holder’s sole and absolute discretion. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next succeeding day which is a Business Day. If the Note is in default, per Section 2.00(a) below, the Company may not prepay the Note without written consent of the Holder.

 

For purposes hereof the following terms shall have the meanings ascribed to them below:

 

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of New York are authorized or required by law or executive order to remain closed.

 

“Conversion Price” shall be equal to $.30.

 

“Principal Amount” shall refer to the sum of (i) the original principal amount of this Note (including the original issue discount, prorated if the Note has not been funded in full), (ii) any additional payments made by the Holder towards the Principal Sum (iii) all guaranteed and other accrued but unpaid interest hereunder, (iv) any fees due hereunder, (v) liquidated damages, and (vi) any default payments owing under the Note, in each case previously paid or added to the Principal Amount.

 

“Principal Market” shall refer to the primary exchange on which the Company’s common stock is traded or quoted.

 

	 
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“Trading Day” shall mean a day on which there is trading or quoting for any security on the Principal Market.

 

“Underlying Shares” means the shares of common stock into which the Note is convertible (including interest, fees, liquidated damages and/or principal payments in common stock as set forth herein) in accordance with the terms hereof.

 

The following terms and conditions shall apply to this Note:

 

Section 1.00 Conversion.

 

(a) Conversion Right. Subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, at any time and from time to time to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock as per the Conversion Formula. The date of any conversion notice (“Conversion Notice”) hereunder shall be referred to herein as the “Conversion Date”. 

 

(b)Stock Certificates or DWAC. The Company will deliver to the Holder, or Holder’s authorized designee, no later than 2 Trading Days after the Conversion Date, a certificate or certificates (which certificate(s) shall be free of restrictive legends and trading restrictions if the shares of Common Stock underlying the portion of the Note being converted are eligible under a resale exemption pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) of the Securities Act of 1933, as amended) representing the number of shares of Common Stock being acquired upon the conversion of this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this Note, provided the Company's transfer agent is participating in DTC’s FAST program, the Company shall instead use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or its designee), by crediting the account of the Holder’s (or such designee’s) broker with DTC through its DWAC program (provided that the same time periods herein as for stock certificates shall apply). 

 

(c) Charges and Expenses. Issuance of Common Stock to Holder, or any of its assignees, upon the conversion of this Note shall be made without charge to the Holder for any issuance fee, transfer tax, legal opinion and related charges, postage/mailing charge or any other expense with respect to the issuance of such Common Stock. Company shall pay all Transfer Agent fees incurred from the issuance of the Common Stock to Holder, as well as any and all other fees and charges required by the Transfer Agent as a condition to effectuate such issuance. Any such fees or charges, as noted in this Section that are paid by the Holder (whether from the Company’s delays, outright refusal to pay, or otherwise), will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144. 

 

	 
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(d) Delivery Timeline. If the Company fails to deliver to the Holder such certificate or certificates (or shares through the DWAC program) pursuant to this Section (free of any restrictions on transfer or legends, if eligible) prior to 3 Trading Days after the Conversion Date, the Company shall pay to the Holder as liquidated damages an amount equal to $2,000 per day, until such certificate or certificates are delivered. The Company acknowledges that it would be extremely difficult or impracticable to determine the Holder’s actual damages and costs resulting from a failure to deliver the Common Stock and the inclusion herein of any such additional amounts are the agreed upon liquidated damages representing a reasonable estimate of those damages and costs. Such liquidated damages will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144. 

 

(e) Reservation of Underlying Securities. The Company covenants that it will at all times reserve and keep available for Holder, out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, five times the number of shares of Common Stock as shall be issuable (taking into account the adjustments under this Section 1.00, but without regard to any ownership limitations contained herein) upon the conversion of this Note (consisting of the Principal Amount) under the formula in Section 2.00(c) below to Common Stock (the “Required Reserve”). The Company covenants that all shares of Common Stock that shall be issuable will, upon issue, be duly authorized, validly issued, fully-paid, non-assessable and freely-tradable (if eligible). If the amount of shares on reserve in Holder’s name at the Company’s transfer agent for this Note shall drop below the Required Reserve, the Company will, within 2 Trading Days of notification from Holder, instruct the transfer agent to increase the number of shares so that the Required Reserve is met. In the event that the Company does not instruct the transfer agent to increase the number of shares so that the Required Reserve is met, the Holder will be allowed, if applicable, to provide this instruction as per the terms of the Irrevocable Transfer Agent Instructions attached to this Note. The Company agrees that the maintenance of the Required Reserve is a material term of this Note and any breach of this Section 1.00(e) will result in a default of the Note.

 

(f) Conversion Limitation. The Holder will not submit a conversion to the Company that would result in the Holder beneficially owning more than 9.99% of the then total outstanding shares of the Company (“Restricted Ownership Percentage”).

 

(g) Conversion Delays. If the Company fails to deliver shares in accordance with the timeframe stated in Section 1.00(b), the Holder, 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. The rescinded conversion amount will be returned to the Principal Sum with the rescinded conversion shares returned to the Company, under the expectation that any returned conversion amounts will tack back to the Effective Date.

 

(h) Shorting and Hedging. Holder may not engage in any “shorting” or “hedging” transaction(s) in the Common Stock prior to conversion.

 

(i) Conversion Right Unconditional. If the Holder shall provide a Conversion Notice as provided herein, the Company's obligations to deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment, or alleged breach by the Holder of any obligation to the Company.

 

	 
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Section 2.00 Defaults and Remedies.

 

(a) Events of Default. An “Event of Default” is: (i) a default in payment of any amount due hereunder which default continues for more than 5 Trading Days after the due date; (ii) a default in the timely issuance of underlying shares upon and in accordance with terms of Section 1.00, which default continues for 2 Trading Days after the Company has failed to issue shares or deliver stock certificates within the 3rd Trading Day following the Conversion Date; (iii) if the Company does not issue the press release or file the Current Report on Form 8-K, in each case in accordance with the provisions and the deadlines referenced Section 4.00(j); (iv) failure by the Company for 3 days after notice has been received by the Company to comply with any material provision of this Note; (v) failure of the Company to remain compliant with DTC, thus incurring a “chilled” status with DTC; (vi) any default of any mortgage, indenture or instrument which may be issued, or by which there may be secured or evidenced any indebtedness, for money borrowed by the Company or for money borrowed the repayment of which is guaranteed by the Company, whether such indebtedness or guarantee now exists or shall be created hereafter; (vii) if the Company is subject to any Bankruptcy Event; (viii) any failure of the Company to satisfy its “filing” obligations under the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the rules and guidelines issued by OTC Markets News Service, OTCMarkets.com and their affiliates; (ix) failure of the Company to remain in good standing with its state of domicile; (x) any failure of the Company to provide the Holder with information related to its corporate structure including, but not limited to, the number of authorized and outstanding shares, public float, etc. within 1 Trading Day of request by Holder; (xi) failure by the Company to maintain the Required Reserve in accordance with the terms of Section 1.00(e); (xii) failure of Company’s Common Stock to maintain a closing bid price in its Principal Market for more than 3 consecutive Trading Days; (xiii) any delisting from a Principal Market for any reason; (xiv) failure by Company to pay any of its Transfer Agent fees in excess of $2,000 or to maintain a Transfer Agent of record; (xv) failure by Company to notify Holder of a change in Transfer Agent within 24 hours of such change; (xvi) any trading suspension imposed by the United States Securities and Exchange Commission (the “SEC”) under Sections 12(j) or 12(k) of the 1934 Act; or (xvii) failure by the Company to meet all requirements necessary to satisfy the availability of Rule 144 to the Holder or its assigns, including but not limited to the timely fulfillment of its filing requirements as a fully-reporting issuer registered with the SEC, requirements for XBRL filings, and requirements for disclosure of financial statements on its website; 

 

(b) Remedies. If an Event of Default occurs, the outstanding Principal Amount of this Note owing in respect thereof through the date of acceleration, shall become, at the Holder's election, immediately due and payable in cash at the “Mandatory Default Amount”. The Mandatory Default Amount means 150% of the outstanding Principal Amount of this Note, will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144. Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Note, this Note shall accrue additional interest, in addition to the Note’s “guaranteed” interest, at a rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. In connection with such acceleration described herein, the Holder need not provide, and the Issuer hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder 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 the Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the note until such time, if any, as the Holder receives full payment pursuant to this Section 2.00(b). No such rescission or annulment shall affect any subsequent event of default or impair any right consequent thereon. Nothing herein shall limit the Holder'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 Issuer's failure to timely deliver certificates representing shares of Common Stock upon conversion of the Note as required pursuant to the terms hereof.

 

	 
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(c) Conversion Right. At any time and from time to time after a default occurs solely due to the fact the Note is not retired on or before the Maturity Date (“Maturity Default”), subject to the terms hereof and restrictions and limitations contained herein, the Holder shall have the right, at the Holder's sole option, to convert in whole or in part the outstanding and unpaid Principal Amount under this Note into shares of Common Stock at the Maturity Default Conversion Price. The “Maturity Default Conversion Price” shall be equal to the lower of: (a) the Conversion Price or (b) 65% of the lowest trading price of the Company’s common stock in the 15 Trading Days prior to the date on which Holder elects to convert all or part of the Note. . For the purpose of calculating the Default Conversion Price only, any time after 4:00 pm Eastern Time (the closing time of the Principal Market) shall be considered to be the beginning of the next Business Day. If the Company is placed on “chilled” status with the DTC, the discount shall be increased by 10%, i.e., from 35% to 45%, until such chill is remedied. If the Company is not DWAC eligible through their Transfer Agent and DTC’s FAST system, the discount will be increased by 5%, i.e., from 35% to 40%. In the case of both, the discount shall be a cumulative increase of 15%, i.e., from 35% to 50%. 

 

Section 3.00 Representations and Warranties of Holder.

 

Holder hereby represents and warrants to the Company that:

 

(a) Holder is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933, as amended (the “1933 Act”), and will acquire this Note and the Underlying Shares (collectively, the “Securities”) for its own account and not with a view to a sale or distribution thereof as that term is used in Section 2(a)(11) of the 1933 Act, in a manner which would require registration under the 1933 Act or any state securities laws. Holder has such knowledge and experience in financial and business matters that such Holder is capable of evaluating the merits and risks of the Securities. Holder can bear the economic risk of the Securities, has knowledge and experience in financial business matters and is capable of bearing and managing the risk of investment in the Securities. Holder recognizes that the Securities have not been registered under the 1933 Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Securities is registered under the 1933 Act or unless an exemption from registration is available. Holder has carefully considered and has, to the extent Holder believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Securities for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, and has determined that the Securities are a suitable investment for it. Holder has not been offered the Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to Holders’ knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising. Holder has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Securities and the Company, and all such questions have been answered to the full satisfaction of Holder. The Company has not supplied Holder any information regarding the Securities or an investment in the Securities other than as contained in this Agreement, and Holder is relying on its own investigation and evaluation of the Company and the Securities and not on any other information.

 

	 
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(b) The Holder is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted. The Holder is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

 

(c) All corporate action has been taken on the part of the Holder, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note. The Holder has taken all corporate action required to make all of the obligations of the Holder reflected in the provisions of this Note, valid and enforceable obligations.

 

(d) Each certificate or instrument representing Securities will be endorsed with the following legend (or a substantially similar legend), unless or until registered under the 1933 Act or exempt from registration:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

 

Section 4.00 General.

 

(a) Payment of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys' fees and expenses, which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

 

(b) Assignment, Etc. The Holder may assign or transfer this Note to any transferee at its sole discretion. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder and its successors and permitted assigns.

 

(c) Amendments. This Note may not be modified or amended, or any of the provisions of this Note waived, except by written agreement of the Company and the Holder.

 

(d) Funding Window. The Company agrees that it will not enter into a convertible debt financing transaction, including 3(a)9 and 3(a)10 transactions, with any party other than the Holder for a period of 30 Trading Days following the Effective Date and each Additional Consideration Date, as relevant. The Company agrees that this is a material term of this Note and any breach of this Section 4.00(d) will result in a default of the Note.

 

	 
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(e) Piggyback Registration Rights. The Company shall include on the next registration statement that the Company files with the 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 30% of the outstanding Principal Sum of this Note, but not less than $20,000, being immediately due and payable to the Holder at its election in the form of a cash payment or an addition to the Principal Sum of this Note.

 

(f) Terms of Future Financings. So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any convertible debt security (whether such debt begins with a convertible feature or such feature is added at a later date) with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable term and such term, at the Holder's option, shall become a part of this Note and its supporting documentation.. The types of terms contained in the other security that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion look back periods, interest rates, original issue discount percentages and warrant coverage.

 

(g) Governing Law; Jurisdiction.

 

(i) Governing Law. This Note shall be governed by, and construed and interpreted in accordance with, the substantive laws of the Commonwealth of Puerto Rico without giving effect to any conflict of laws rule or principle that might require the application of the laws of another jurisdiction.

 

(ii) Jurisdiction and Venue. Any dispute, claim, suit, action or other legal proceeding arising out of or relating to this Note or the rights and obligations of each of the parties shall be brought only in a competent court in San Juan, Puerto Rico or in the federal courts of the United States of America located in San Juan, Puerto Rico.

 

(iii) No Jury Trial. The Company hereto knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or arising out of, under, or in connection with, this Note.

 

(iv) Delivery of Process by the Holder to the Company. In the event of an action or proceeding by the Holder against the Company, and only by the Holder against the Company, service of copies of summons and/or complaint and/or any other process that may be served in any such action or proceeding has to be made by hand delivery of such process to its last known attorney as set forth in its most recent SEC filing.

 

(v) 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.

 

(h) No Bad Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act of 1933, as amended, on the basis of being a “bad actor” as that term is established in the September 13, 2013 Small Entity Compliance Guide published by the SEC.

 

	 
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(i) Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates any 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. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal, fees, liquidated damages or interest on this Note.

 

(j) Securities Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. Eastern Time on the Trading Day immediately following the Date of Execution, issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K, including a copy of this Note as an exhibit thereto, with the SEC within the time required by the 1934 Act. From and after the filing of such press release, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company, or any of its officers, directors, employees, or agents in connection with the transactions contemplated by this Note. The Company and the Holder shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Holder shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Holder, or without the prior consent of the Holder, with respect to any press release of the Company, none of which consents shall be unreasonably withheld, delayed, denied, or conditioned except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Holder, or include the name of the Holder in any filing with the SEC or any regulatory agency or Principal Market, without the prior written consent of the Holder, except to the extent such disclosure is required by law or Principal Market regulations, in which case the Company shall provide the Holder with prior notice of such disclosure permitted hereunder.

 

The Company agrees that this is a material term of this Note and any breach of this Section 4.00(j) will result in a default of the Note.

 

(k) Attempted Below-par Issuance. In the event that the Holder delivers a Conversion Notice to the Company and, if as of such date, (i) the Conversion Price would be less than par value of the Company’s Common Stock and (ii) within three business days of the delivery of the Conversion Notice, the Company shall not have reduced its par value such that all of the requested conversion transaction may then be accomplished, then the Company and the Holder shall utilize the following conversion protocol for Par Value Adjustment. The Holder shall transmit to the Company: (X) a “preliminary” Conversion Notice for the full number of shares of Common Stock that would be issued at the Conversion Price without regard to any below-par value conversion issues; followed by (Y) a “par value” Conversion Notice for the number of shares of Common Stock with the Conversion Price increased from the “preliminary” Conversion Price to a Conversion Price at par value; and, finally, (Z) a “liquidated damages” Conversion Notice for that number of shares of Common Stock that represents the difference between the “preliminary” Conversion Notice full number of shares and the “par value” Conversion Notice limited number of shares. The Conversion Price of such “liquidated damages Common Shares” would be the par value of the Common Stock. Accordingly, through this protocol, the Company would issue, in two transactions, an amount of shares of its Common Stock equivalent to the full number of shares of Common Stock that would have been issued in accordance with the “preliminary” Conversion Notice without regard to any below-par value conversion issues. In the event that the Holder is precluded from exercising any or all of its conversion rights hereunder as a result of a proposed “below par” conversion, the Company agrees that, in lieu of actual damages for such failure, liquidated damages may be assessed and recovered by the Holder without being required to present any evidence of the amount or character of actual damages sustained by reason thereof. The amount of such liquidated damages shall be an amount equivalent to the trading price utilized in the “preliminary” Conversion Notice multiplied by the number of shares calculated on the “liquidated damages” Conversion Notice. Such amount shall be assessed and become immediately due and payable to the Holder (at its election) in the form of a (i) cash payment, (ii) an addition to the Principal Sum of this Note, or (iii) the immediate issuance of that number of shares of Common Stock as calculated on the “liquidated damages” Conversion Notice. Such liquidated damages are intended to represent estimated actual damages and are not intended to be a penalty, but, by virtue of their genesis and subject to the election of the Holder (as set forth in the immediately preceding sentence), will be automatically added to the Principal Sum of the Note and tack back to the Effective Date for purposes of Rule 144, as the Company’s failure to maintain the par value of its Common Stock at an amount that would not result in a “below par” conversion failure is equivalent to a default as of the Issuance Date of the Note.

 

[Signature Page to Follow.]

 

	 
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IN WITNESS WHEREOF, the Company has caused this Fixed Convertible Promissory Note to be duly executed on the day and in the year first above written.

 

	 	INDOOR HARVEST CORP.	
	 	 	 	 
		By:		
	
 
	
 
	
 
	
 

	
 
	
Name: 
		 
	
 
	
 
	
 
	
 

	 	Title: 		 
	
 
	
 
	
 
	
 

	 	Email:	 	 
	
 
	
 
	
 
	
 

	
 
	
Address:
	
 
	
 

 

This Fixed Convertible Promissory Note of March 22, 2017 is accepted this ____ day of , 2017 by

 

	
TANGIERS GLOBAL, LLC
	
	 	 	 
	By:		
		
Name: 
	 
	
 
	Title: Managing Member	 

 

	 
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