Document:

Exhibit 10.18

 

LETTER AGREEMENT - RESTATED

 

	BETWEEN:	ILDISP, LLC, a limited liability company having a place of business in the State of Illinois, hereinafter referred to as the ""Purchaser";

 

	AND:	NUTRITIONAL HIGH (COLORADO) INC., a corporation having a place of business in the State of Colorado, hereinafter referred to as "NHCI";

 

	AND:	NUTRITIONAL HIGH INTERNATIONAL INC., a corporation having a place of business in the City of Toronto, hereinafter referred to as the "NHII";

 

	AND:	NH MEDICINAL DISPENSARIES INC., a corporation having a place of business in the State of Illinois, hereinafter referred to as the "NHMD";

 

	
AND:

	SMALL'S MILL HOLDINGS INC., a corporation having a place of business in the State of Colorado, hereinafter referred to as the "SMHI";

Altogether referred to as "Parties";

 

WHEREAS, NHCI is an indirect wholly owned subsidiary of NHII,

WHEREAS, NHCI owns a 100% interest in each of NHMD and SMHI (together referred to as "Illinois Operation");

WHEREAS, the Purchaser wishes to purchase 50% interest in each of NHMD and SMHI ("Proposed Transaction"), by way of acquiring 100 common shares from the treasury of NHMD ("NHMD Shares") and 100 common shares from the treasury of SMHI ("SMHI Shares");

WHEREAS, NHMD has been granted an authorization to register ("Authorization to Register") a medical cannabis dispensary ("Dispensary") by the Illinois Department of Financial and Professional Regulation ("IDFPR");

WHEREAS, SMHI has entered into a contract to purchase the real estate property located at 2415 State Street, Lawrenceville, Illinois (the "Premises") to be utilized as the location at which the Dispensary will operate and has possession of the Premises;

WHEREAS, NHII has advanced approximately $200,000 as a loan to NHMD and SMHI (the "NHII Loan");

WHEREAS, NHMD and SMHI used the proceeds of the NHII Loan in order to secure the Authorization to Register, acquire the Premises, design the Dispensary, submit the registration package for the Dispensary ("Dispensary Registration") and prepare for launch;

WHEREAS, SMHI has paid $100,000 against the contract to purchase the Premises and assumed a seller mortgage (the "Seller Mortgage") in the amount of $250,000 on terms outlined herein in the Promissory Note attached hereto as Schedule "A";

WHEREAS, the Parties intend on working together to renovate a building located on the Premises to house the Dispensary, and commence operating the Dispensary on the terms set out herein;

WHEREAS the principals of the Parties herein have previously entered into an agreement materially in the same form as this Letter Agreement, the Purchaser has now been formed, and as such, the parties wish to restate the terms under which the parties intend on proceeding with the transactions contemplated herein;

 

   NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are conclusively acknowledged by the parties hereto, the parties hereto agree as follows:

 

1. BINDING PROVISIONS. In recognition of the significant costs to be borne by each of the Parties in pursuing the Proposed Transaction and further in consideration of their respective undertakings as to the matters described herein, this Letter Agreement shall be legally binding upon and enure to the benefit of the Parties hereto and their respective heirs, executors, administrators, successors, permitted assigns and legal representatives, unless this Letter Agreement is terminated in accordance with the provisions set out herein.

2. DEFINITIVE AGREEMENTS. While this Letter Agreement is binding, the parties intend on preparing more definitive agreements (the "Definitive Agreements") including subscription agreements for NHMD and SMHI, unanimous shareholder agreements for NHMD and SMHI (as referenced in section 6 herein), promissory notes from NHMD and SMHI, and the seller mortgage guarantee (as referenced in section 4 herein).  NHII and its counsel shall be responsible for preparing the initial draft of the Definitive Agreements.

3. WORK PLAN AND EARN-IN BY THE PURCHASER.

		(a)	The Parties shall use its best efforts to launch the Dispensary business as set out in the Dispensary Registration. The Parties shall complete the build-out and fulfill other requirements to the satisfaction of IDFPR ("Dispensary Establishment") in order to obtain a final grant of license by May 15, 2016 or another deadline prescribed by the IDFPR.

 

		(b)	Subject to Subsection 3(d) below, the Purchaser shall fund up to $300,000 ("Initial Funds") of the expenses necessary to complete the Dispensary Establishment and fund the first four months of working capital for the Dispensary in accordance with the budget outlined herein as Schedule "B" (the "Budget"), or as otherwise jointly determined and agreed upon by the Parties. If the Purchaser fails to pay invoices pursuant to the Budget resulting in a delay in the Dispensary Establishment or any contractor suspending their work on the Property, the Purchaser will be obligated to pay a late penalty equal to 50% of the invoice to NHCI.

 

		(c)	For each $30,000 of the Initial Funds advanced by the Purchaser to NHMD or SMHI (as appropriate) the Purchaser shall receive:

 

		(i)	An unsecured no interest promissory note issued by NHMD in the amount of $10,000;

 

		(ii)	An unsecured no interest promissory note issued by SMHI in the amount of $10,000;

 

		(iii)	An unsecured convertible note issued by NHMD in the amount of $5,000, convertible:

 

		1.	upon receiving the approval of the IDFPR of the Purchaser's application with respect to its interests in NHMD (the "Purchaser IDFPR Application"), into ten (10) NHMD Shares at a price of $500 per NHMD Share; or

 

		2.	if the Purchaser IDFPR Application is rejected or not approved because the Purchaser has (I) withdrawn the Purchaser IDFPR Application or (II) has not cooperated or used its best efforts to obtain the approval of the Purchaser IDFPR Application, into an unsecured promissory note issued by NHMD in the amount of $5,000 with a maturity of six (6) years and carrying no interest for the first four (4) years, provided if the note is not repaid after the first four years, interest will accrue starting from the fifth year at a rate of five percent (5%) per annum;

 

If the Purchaser IDFPR Application is otherwise rejected or not approved, the NHMD convertible note will not convert and will mature and be reapayable ninety (90) days after such rejection, and shall carry an interest rate of seven percent (7%) per annum which shall start accruing upon such rejection;

 

		(iv)	An unsecured convertible note issued by SMHI in the amount of $5,000, convertible:

 

		1.	upon receiving the approval of the Purchaser IDFPR Application, into ten (10) SMHI Shares at a price of $500 per SMHI Share; or

		2.	if the Purchaser IDFPR Application is rejected or not approved because the Purchaser has (I) withdrawn the Purchaser IDFPR Application or (II) has not cooperated or used its best efforts to obtain the approval of the Purchaser IDFPR Application, into an unsecured promissory note issued by SMHI in the amount of $5,000 with a maturity of six (6) years and carrying no interest for the first four (4) years, provided if the note is not repaid after the first four years, interest will accrue starting from the fifth year at a rate of five percent (5%) per annum;

 

If the Purchaser IDFPR Application is otherwise rejected or not approved, the SMHI convertible note will not convert and will mature and be reapayable ninety (90) days after such rejection, and shall carry an interest rate of seven percent (7%) per annum which shall start accruing upon such rejection;

 

Any funds advanced by the Purchaser which is less than $30,000 will be considered a zero interest shareholders loan to SMHI until such time as it is repaid or the shares and promissory notes are issued by NHMD and SMHI pursuant to this subsection 3(c).  Once an aggregate of $300,000 of the Initial Funds has been advanced, the Purchaser shall own an undivided fifty (50%) equity interest in each of NHMD and SHMI.  Funds may be advanced in cash directly to NHMD or SMHI, the Purchaser may pay bills on behalf of NHMD or SMHI, or may provide in-kind contributions to NHMD or SMHI (such as inventory) at values agreeable to both the Purchaser and NHII.

  

		(d)	If less than a $300,000 investment is required for the Dispensary Establishment and funding the first four months of working capital for the Dispensary, the Purchaser may secure its 50% interest in NHMD and SHMI by advancing additional funds to NHMD and SHMI as equity so that the Purchaser's equity contribution equals $100,000, and if necessary additional debt (altogether, the "Alternate Advance"), which funds will be used to pay down the NHII Loan so that it equals no more than the Purchaser's loan.  For illustration purposes, if the Purchaser is able to complete the Dispensary Establishment and fund the first four months of working capital for the Dispensary for an aggregate investment of $210,000 (of which $70,000 would have been advanced as equity and $140,000 advanced as debt), to secure their 50% interest in NHMD and SHMI, the Purchaser may advance an additional $45,000 (of which $30,000 will be as equity and $15,000 as debt), which funds would be paid to NHII to reduce the NHII Loan, resulting in the Purchaser having advanced an aggregate of $255,000 (of which $100,000 would have been equity and $155,000 as a loan), and the NHII Loan having been paid down to $155,000.   

 

  

		(e)	If the costs of Dispensary Establishment and working capital requirements exceed $300,000, additional funds to complete the Dispensary Establishment and any working capital shall be funded 50% by the NHCI and 50% by the Purchaser ("Additional Funds"). The Additional Funds shall be advanced in the form of unsecured promissory notes or as otherwise agreed to by the Parties.

 

  

		(f)	If this agreement is terminated in accordance with section 14 herein prior to the parties entering into the Definitive Agreements, any Initial Funds advanced will become a loan to NHCI repayable to the Purchaser within 90 days of such written termination by the parties.

 

  

		(g)	Provided that the Purchaser is fulfilling its funding obligations on a timely basis, no party will act to encumber the assets of NHMD or SMHI or issue shares of NHMD or SMHI to third parties without the consent of the other party.  If NHCI or NHII provides notice that the Purchaser is not fulfilling its funding obligations, before it can take steps to fund NHMD or SMHI, issue shares in said companies or encumber the assets of said companies, it must provide written notice to the Purchaser, providing the Purchaser an ability to cure any deficiency within 14 days of such notice.

  

		(h)	Notwithstanding any other provision in this Agreement, in the event that any Shareholder is bought out of their shares in NHMD and/or SMHI in accordance with the respective Shareholder Agreements, such Shareholder shall have the option in their sole discretion to accelerate the maturity date for any promissory and/or convertible notes held by such Shareholder to the date of the closing of such sale of shares.

 

  

4. GUARANTEE OF SELLER MORTGAGE. The Purchaser shall provide a guarantee, guaranteeing 50% of the Seller Mortgage, in the amount of $125,000, mirroring the terms outlined the Guarantee of Payment by NHII, which is attached hereto as Schedule "C", to be signed on the date hereof and held in escrow by NHCI's solicitors, and released:

		(a)	upon receipt of approval of the Purchaser IDFPR Application; or

		(b)	if the Purchaser IDFPR Application is rejected or not approved because the Purchaser has (I) withdrawn the Purchaser IDFPR Application or (II) has not cooperated or used its best efforts to obtain the approval of the Purchaser IDFPR Application;

 

For greater certainty, if the Purchaser IDFPR Application is otherwise rejected or not approved, the guarantee shall not be released and will be cancelled.

 

 

5. PRODUCT LICENSE. The Purchaser will use best efforts to introduce to NHII a licensed cultivator with whom NHII may try to develop a mutually agreeable framework for NHII to license its intellectual property relating to cannabis-infused edible products and cannabis oil extracts to the Purchaser ("Licensed Products") in Illinois. It is anticipated that the licensing arrangement will provide for such cultivator to pay to NHII a license or a royalty fee equal to the sale price at which it sells the Licensed Products less the cost the cultivator incurs to make the products, plus a mark-up to be agreed.

 

6. CLOSING AND CONDITIONS OF CLOSING. The parties intend that the closing of the Proposed Transaction (the "Closing") will occur in tranches with the first tranche of funding from the Purchaser occurring on or before April 4, 2016, or such other date as the parties shall mutually agree (the "Closing Date"). Prior to the final grant of equity to the Purchaser resulting in the Purchaser acquiring a 50% interest in each of NHMD and SMHI, the following conditions shall have been met:

 

		(a)	the Purchaser and NHCI will enter into the Definitive Agreements, including a Unanimous Shareholders Agreements in a form satisfactory to both the Purchaser and NHCI providing for, among other things,

 

		(i)	the Purchaser and NHCI to each appoint two directors of NHMD and SMHI;

 

		(ii)	subject to the division of the funding required to complete the Dispensary Establishment as described above in Section. 3 herein;

 

		(iii)	certain decisions (to be defined in the Shareholder Agreements) must be approved by both the Purchaser and NHCI;

 

		(iv)	a first right of refusal on a sale of an interest in either NHMD or SMHI;

 

		(v)	a shotgun provision.

 

		(b)	the final schedule of how the Initial Funds shall be deployed, including: which contractors shall be used to complete the build-out, personnel decisions for the Dispensary

 

		(c)	all requisite governmental and regulatory approvals of, exemptions from and consents to the Proposed Transaction shall have been obtained, including without limitation, the approval of the IDFPR.

 

		(d)	the NHMD Shares and SMHI Shares shall be free and clear of all encumbrances;

 

		(e)	NHCI owns 100 NHMD Shares and 100 SMHI Shares, and other than the shares to be purchased by the Purchaser as so provided for herein, NHMD and SMHI shall have no additional securities or rights to purchase securities issued and outstanding,

 

		(f)	neither NHMD nor SMHI shall have outstanding any secured debt or securities with claims to their respective cash flows, as the case may be, except for the Seller Mortgage;

 

		(g)	the Purchaser shall be satisfied, in its sole discretion, with its due diligence investigations of NHMD and SMHI;

 

		(h)	customary closing certificates and other usual closing documents shall have been delivered.

  

7. REPRESENTATIONS AND WARRANTIES.

  

		(a)	The Definitive Agreements shall include representations and Warranties of NHII, NHCI, SMHI, NHMD, and the Purchaser of a nature and type appropriate for transactions similar to the Proposed Transaction.

		(b)	To the best of the knowledge and belief of NHII, NHCI, SMHI and NHMD, there are no liabilities owed by SMHI or NHMD outside of the amounts provided for in Schedule "B" or listed in Schedule "D" hereto.

 

NHII and NHCI, jointly and severally, hereby agree that any cost or liability of SMHI and/or NHMD existing as of the date hereof and not provided for in Schedule "B" or listed in Schedule "D", shall be at NHII and/or NHCI's sole expense and shall not be treated as a capital contribution or loan to the SMHI and/or NHMD, unless otherwise agreed by Purchaser.

8. CONDITIONS ON ENTRY INTO AGREEMENTS. The parties intend that the entry into the Agreements to effect the Proposed Transaction will occur on or before April 4, 2016, or such other date as the parties shall mutually agree (the "Closing Date").

  

9. CONFIDENTIALITY. Except as and to the extent required by law, none of the parties hereto shall disclose or use, and it shall cause its officers, directors, employees, agents and other representatives not to disclose or use, any Confidential Information (as defined below) furnished, or to be furnished, by the other parties, at any time or in any manner, except for its use in connection with its evaluation of the Proposed Transaction.  For purposes of this Letter Agreement, "Confidential Information" means any information about the Purchaser, NHII, NHII products, brands, recipes, know-how or other intellectual property, whether communicated in written form, verbally, visually, technically or pursuant to any other media. Such information if disclosed in writing shall be marked "confidential" or similar designation or if orally or visually disclosed shall be identified as the confidential information of the disclosing party at the time of disclosure.  The term "Confidential Information" shall not be deemed to include information which the disclosing party can demonstrate:  (i) is generally available to or know by the public other than as a result of improper disclosure by the receiving party or any of its representatives, or (ii) is obtained by the receiving party from a source other than the disclosing party or any of their representatives bound by a duty of confidentiality, provided that such source was not bound by a duty of confidentiality to the disclosing party.  If this Letter Agreement is terminated pursuant to Section 14 below, shall promptly return to the disclosing party, as applicable, any Confidential Information in its possession.

 

10. DISCLOSURE/PUBLIC ANNOUNCEMENTS. The Parties acknowledge that each party may at its option and expense, place an announcement in such newspapers and periodicals announcing this Letter Agreement or any other matters involving NHMD or SMHI, provided that such party shall submit to the other party and shareholders holding greater than 10% of the respective company, a copy of such announcement with a reasonable opportunity to review. Prior to publication of any announcement, each party to this Letter Agreement and any shareholders holding greater than 10% of the respective company shall approve the form and substance of such announcement, which approval shall not be unreasonably withheld, provided that disclosure of named parties is subject to the consent of such named party (unless disclosure is otherwise required by law).

  

11. RESPONSIBILITY FOR FEES AND COSTS. The Parties shall each be responsible for its own respective costs, fees of advisors and other expenses in connection herewith, including relating to the negotiation, preparation and execution of the Definitive Agreements, or otherwise relating to the Proposed Transaction, provided for, however, NHMD and SMHI shall pay the costs of NHII in preparing the Definitive Agreements up to a maximum of $20,000.  Any filing fees or cost payable to any governmental or regulatory agency or for environmental audit fees shall be paid for by NHMD.  In the event the parties are unable to come to an agreement before the execution of the Definitive Agreements, but after their creation, said cost shall be borne equally by NHII and the Purchaser up to $10,000 each, with any amount over an aggregate of $20,000 to be borne solely by NHMD.

 

12. GOOD FAITH OBLIGATION. The Parties shall negotiate in good faith to arrive at a mutually acceptable Definitive Agreements for authorization, execution and delivery on the earliest reasonably practicable date.

 

13. DUE DILIGENCE. The parties hereto and their duly authorized representatives shall be entitled to make such investigations as they deem advisable.

14. TERMINATION. This Letter Agreement may be terminated:

 

		(a)	by mutual written consent of all Parties; or

 

		(b)	by written notice from the Purchaser, if it is not satisfied with its due diligence investigation for any reason;

 

provided however, that the termination of this Letter Agreement shall not affect the liability of a party for breach of any provisions prior to the termination. Upon termination of the Letter Agreement, the parities shall have no further obligations under this Letter Agreement, except with respect to sections 3(f), 9 and 11, which shall survive in full force and effect, unamended.

 

 

15. GENERAL

 

15.1 Waiver.  No Party will be deemed to have waived the exercise of any right that it holds under this Letter Agreement unless such waiver is made in writing.  No waiver made with respect to any instance involving the exercise of any such right.

 

15.2 Counterparts.  This Letter Agreement may be executed in any number of counterparts, and all such counterparts taken together shall be deemed to constitute one and the same instrument.  Any party delivering an executed counterpart by facsimile shall also deliver a manually executed counter part of this Letter Agreement.

 

15.3 Time.  Time is of the essence hereof.

 

15.4 Severability.  If any provisions of this Letter Agreement or the application of such provision to any party or person or circumstance shall be held illegal, invalid, or unenforceable, the remainder of this Letter Agreement, or the application of such provision to a party or person or circumstance other than those as to which it is held illegal, invalid, or unenforceable shall not be affected thereby.  Each provision of this Letter Agreement is intended to be severable, and if any provision is illegal, invalid or unenforceable in any jurisdiction, this will not affect the legality, validity or enforceability of such provision in any other jurisdiction or the validity of the remainder of this Letter Agreement.

 

15.5 Governing Law. This Letter Agreement will be interpreted and enforced in accordance with the laws of the State of Illinois.

 

15.6. Previous Agreements.  This Letter Agreement supersedes all previous agreements between the parties hereto.

 

15.7 Currency. Unless otherwise set out herein, all payments contemplated herein shall be paid in U.S. dollars.

To confirm the foregoing, please sign the enclosed duplicate copy of this Letter Agreement where indicated below and return the same to the Purchaser prior to 5:00 p.m. Eastern Time on April 4, 2016, failing which, the proposal set forth herein expires automatically at such time.

[REMAINED OF THIS PAGE INTENTIONALLY LEFT BLANK]

This Letter Agreement reflects accurately the parties' understanding and agreement with respect to the matters set out above.

Confirmed this 4th day of April 2016

NUTRITIONAL HIGH INTERNATIONAL INC.

_____/"Signed"/ David Posner__________________

Name:     David Posner

Title:       CEO

NUTRITIONAL HIGH (COLORADO) INC.

_____/"Signed"/ David Posner__________________

Name:     David Posner

Title:       CEO

NH MEDICINAL DISPENSARIES INC.

______/"Signed"/ David Posner__________________

Name:     David Posner

Title:       CEO

SMALL'S MILL HOLDINGS INC.

______/"Signed"/ David Posner _________________

Name:     David Posner

Title:       CEO

ILDISP, LLC

______/"Signed"/ A.S.O_________________

SCHEDULE "A"

SELLER MORTGAGE PROMISSORY NOTE

 

 

 

 

 

 

 

PROMISSORY NOTE WITH GUARANTY OF PAYMENT

 

 

	
 

	November 20, 2015      
	
$250,000.00  

	
Lawrenceville, Illinois

 

FOR VALUE RECEIVED, Small's Mill Holdings, Inc., a Nevada corporation, with offices at 77 King Street West, Suite 2905, Toronto, Ontario M5K 1H1 (referred to herein as "Borrower"), does hereby promise to pay to Dan G. Scherer and T. Holly Scherer, 8732 N. Frontage Lane, Bridgeport, IL 62417 ("Lenders"), or their successors and assigns, at such place as the holder of this Note may from time to time designate, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000.00), with interest from the date hereof on the unpaid principal balance at the rate of six percent (6.00%) per annum, principal and interest payable in monthly installments of Two Thousand One Hundred Nine Dollars and Sixty-four Cents ($2,109.64), each beginning on the 20th day of December, 2015 and continuing on the 20th day of each month thereafter for a term of twenty-four (24) months, and a final payment on December 20, 2017, on which date the entire unpaid principal balance, accrued interest, any unpaid late charges, and any other amounts due and owing to Lenders shall be paid in full.  If this Note is signed by more than one person, the obligations and authorizations hereunder shall be joint and several.

1. DEFAULT BY BORROWER.  Should default be made in the payment of any installment when due, or in the performance of any provision or condition contained in the Installment Contract securing this Note, the whole sum principal and interest shall become immediately due at the option of the holder and regardless of any prior forbearance.  Interest shall accrue following any default hereunder at the rate set forth in this Note, as adjusted from time to time.

2. LATE CHARGE.  The undersigned agree (a) to pay immediately, without demand, to the holder, in the event any installment is not received by the holder on its due date  and without regard to the date as of which said payment is credited, a daily late payment charge equal to two percent (2%) of the installment past due;  (b) that it would be impractical or extremely difficult to fix the holder's actual damages in the event that any installment shall not be paid when due; (c) that such amount shall be presumed to be the amount of damages for such late payment.  This paragraph and the amount that it provides shall not limit the holder's right, under this Note, the Installment Contract securing it, or otherwise, to compel prompt performance thereunder.

3. PREPAYMENT PRIVILEGE.  Borrower shall have the right to make prepayments in increments equal to a regular monthly installment amount on the regular installment due dates.  Any prepayments made pursuant to this Paragraph shall be first applied to the monthly installments last coming due hereunder, and prepayments made shall not defer the due date of the payment next coming due.

4. ACCELERATION CLAUSE.  This Note is issued in consideration of a loan made by Lenders to Borrower in connection with a certain Installment Contract for Sale of Commercial Real Estate dated November 20, 2015.  It is hereby expressly understood and agreed that if default be made in the payments due under said Installment Contract, or if default be made in the payment of any of the said installments of principal or of interest pursuant to this Note, the principal sum above mentioned, or any balance that may appear to be unpaid thereon, together

with all unpaid interest thereon, shall at the option of the legal holder of this note, become immediately due and payable, without notice, and shall be collectible immediately or at any time after such default, anything hereinbefore contained to the contrary notwithstanding.

5. NOTE AND INSTALLMENT CONTRACT.  This Note and the Installment Contract heretofore identified shall be read together so that all rights accruing to Lenders under any document shall be considered as accruing under all documents and all obligations of Borrower under any document shall be considered as obligations under all documents.  This Note is executed solely to establish the indebtedness due and owing pursuant to the Installment Contract for Sale of Commercial Real Estate.  This Note shall not be deemed to create a separate and distinct obligation from the obligation created by the Installment Contract.

6. COST OF COLLECTION.  The undersigned together with any sureties, endorsers, and guarantors of this Note jointly and severally promise to pay (a) all costs and expenses of collection, including without limitation attorneys' fees, in the event this Note or any portion of this Note is place in the hands of attorneys for collection and such collection is effected without suit; (b) attorneys' fees, as determined by the judge of the court, and all other costs, expenses, and fees incurred by the holder in the event suit is instituted to collect this Note or any portion of this Note; (c) all costs and expenses provided for in any instrument given as security for this Note and/or incurred by or on behalf of the holder in connection with collecting or otherwise enforcing any right of the holder under this Note, or any instrument given as security for this Note; and (d) all costs and expenses, including, without limitation, attorneys' fees incurred by the holder in connection with any bankruptcy, insolvency of reorganization proceeding, or receivership in which the undersigned is involved, including, without limitation, attorneys' fees incurred in making any appearances in any such proceeding or in seeking relief from any stay or injunction issued in or arising out of any such proceeding.

7. MAXIMUM INTEREST.  In no event whatsoever shall the amount paid, or agreed to be paid, to the holder for the use, forbearance, or retention of the money to be loaned hereunder ("Interest") exceed the maximum amount permissible under applicable law.  If the performance or fulfillment of any provisions hereof, or any other agreement between the holder and the undersigned shall result in Interest exceeding the limit for interest prescribed by law, then the amount of the Interest shall be reduced to the maximum rate that may lawfully be charged or collected by the holder.  If, from any circumstance whatsoever, the holder should receive as Interest an amount that would exceed the highest lawful rate, the amount that would be excessive Interest shall be applied to the reduction of the principal balance owing hereunder (or, at the option of the holder, be paid over to the undersigned) and not to the payment of Interest.

Small's Mill Holdings, Inc.,

a Nevada corporation, Borrower

BY: /"Signed"/ David Posner                                              

         President

 

Attest:

             /"Signed"/ Adam K. Szweras                             

Corporate Secretary

Province of Ontario )

                                  ) ss.

City of Toronto       )

I, the undersigned, a Notary Public, in and for said County and State aforesaid, does hereby certify that ___David Posner_________________, and ____Adam Szweras____________, personally known to me to be the President and Secretary, respectively, of Small's Mill Holdings, Inc., a Nevada corporation and personally known to me to be the same persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that they signed, sealed and delivered the said instrument as their free and voluntary act for the uses and purposes therein set forth.

Given under my hand and Notarial Seal, this _18th___ day of November, 2015.

_________Karen A. Murray__________________

Notary Public

 

SCHEDULE "B"

INITIAL BUDGET FOR DISPENSARY ESTABLISHMENT

AND FOUR MONTHS OF WORKING CAPITAL

 

 

 

 

 

 

 

 

  

	
  ILLINOIS BUILDOUT CASH FLOW SCHEDULE

	
 

	
 

	
Dec'15 - Apr'16 Total:

	
 

	
Jan-16

	
Feb-16

	
Mar-16

	
Apr-16

	
GENERAL AND ADMIN

	
 

	
$3,610

	
$6,610

	
$8,210

	
$24,010

	
$42,439

	
Utilities

	
 

	
$500

	
$500

	
$500

	
$500

	
$2,000

	
General Manager

	
 

	
 

	
$3,000

	
$3,000

	
$5,000

	
$11,000

	
Security Manager

	
 

	
 

	
 

	
 

	
$3,000

	
$3,000

	
Security Staff (3x8hrsx7days@$12.5/hr)

	
 

	
 

	
 

	
 

	
$8,400

	
$8,400

	
PCR (1x8hrsx5days@$15/hr)

	
 

	
 

	
 

	
 

	
$2,400

	
$2,400

	
Annual Renewal Fee

	
 

	
 

	
 

	
 

	
 

	
$0

	
Marketing

	
 

	
 

	
 

	
$1,000

	
$1,000

	
$2,000

	
Security Monitoring Feed

	
 

	
 

	
 

	
$100

	
$100

	
$200

	
Internet/Phone

	
 

	
 

	
 

	
$200

	
$200

	
$400

	
VTB Payments

	
 

	
$2,110

	
$2,110

	
$2,110

	
$2,110

	
$8,439

	
Inventory Software

	
 

	
 

	
 

	
$300

	
$300

	
$600

	
Other Admin

	
 

	
$1,000

	
$1,000

	
$1,000

	
$1,000

	
$4,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CAPITAL COSTS

	
 

	
$55,000

	
$71,800

	
$70,000

	
$0

	
$196,800

	
Buildout

	
 

	
$33,333

	
$33,333

	
$33,333

	
 

	
$100,000

	
Dispensary Design and Furniture

	
 

	
$5,000

	
$10,000

	
$10,000

	
 

	
$25,000

	
Security Contractor

	
 

	
$7,500

	
$15,000

	
$15,000

	
 

	
$37,500

	
Inventory System Setup

	
 

	
 

	
$1,500

	
 

	
 

	
$1,500

	
Contingency (20%)

	
 

	
$9,167

	
$11,967

	
$11,667

	
$0

	
$32,800

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
INVENTORY AND SHIPPING COSTS

	
 

	
 

	
 

	
$10,000

	
$20,000

	
$30,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CONTINGENCY

	
 

	
$7,500

	
$7,500

	
$7,500

	
$7,500

	
$30,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Total Outflows:

	
 

	
$66,110

	
$85,910

	
$95,710

	
$51,510

	
$269,239

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
INFLOWS

	
 

	
 

	
 

	
 

	
 

	
 

	
ILDISP LLC

	
 

	
$70,000

	
$85,000

	
$95,000

	
$50,000

	
$300,000

	
Nutritional High

	
 

	
 

	
 

	
 

	
 

	
$0

	
Total Inflows

	
 

	
$70,000

	
$85,000

	
$95,000

	
$50,000

	
$300,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Bank Balance (Beg):

	
 

	
$0

	
$3,890

	
$2,981

	
$2,271

	
 

	
Net inflow/outflow:

	
 

	
$3,890

	
-$910

	
-$710

	
-$1,510

	
 

	
Bank Balance (End):

	
 

	
$3,890

	
$2,981

	
$2,271

	
$761

	
 

SCHEDULE "C"

GUARANTEE OF PAYMENT

 

 

 

 

 

 

 

 

 

  

GUARANTY OF PAYMENT

FOR VALUE RECEIVED, the receipt and sufficiency whereof are hereby acknowledged, Nutritional High International, Inc., hereby guarantees full, complete and prompt payment and performance by Small's Mill Holdings, Inc., its assigns, or successors in interest of all of the provisions, conditions, covenants and agreements contained in the foregoing Promissory Note, and hereby waive all notice of default by the principal, notice of the acceptance of this guaranty, and consent to any extension of time that may be given by the holder of said note to said maker, its assigns or successors in interest, of the time of payment or performance.

Dated: November ___18th__, 2015

Nutritional High International, Inc.

BY:             /"Signed"/ David Posner                       

             Corporate President

Attest:

 

            /"Signed"/ Adam K. Szweras                   

Corporate Secretary

Province of Ontario )

                                   ) ss.

City of Toronto        )

The undersigned Notary Public does hereby hereby certify that _________ David Posner _________, and _____Adam K. Szweras_________________, personally known to me to be the persons whose names are subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that they signed, sealed and delivered said instrument as their free and voluntary act for the uses and purposes therein set forth.

Given under my hand and Notarial Seal, this __18th__ day of November, 2015.

____________ Karen A. Murray ______________

Notary Public

  

SCHEDULE "D"

NHMD AND SMHI PAYABLES LIST

	
 

	
Outstanding

	 	 
	
Item

	
Amount

	 	
Bill Date(s)

	
Electricity

	
$                        

	156.24	 	
Mar-16

	
Gas

	
$                        

	361.43	 	
Mar-16

	
Water

	
$                          

	28.15	 	
Mar-16

	
Contractor - Jason Joles

	
$                  

	41,609.46	 	
Mar 2016

	
Plumber -  Rick Newlin

	
$                    

	8,100.00	 	
Mar 2016

	
Electrician -  Rob Tracy

	
$                   

	19,208.35	 	
Feb/Mar 2016

	
Architect - ADG

	
$                    

	4,270.50	 	
2015

	
Legal Services

	
$                    

	2,436.25	 	
Jan-16 to Mar-16

	
Mortgage Payment reimbursement to NHII

	
$                     

	2,119.64	 	
March 2016

	
Mortgage Payment April

	
$                    

	2,119.64	 	
April 2016

	
Dave Johnson reimbursement for utilities

	
$                    

	1,704.26	 	
Jan/Feb 2016

	
 

	
 

	 	 	
 

	 	 	 	 	 

 

	
 

	Expected Future Costs	 	 
	
Item

	Amount (approximate)	 	
Notes

	
Electricity

	$ 	
    160.00

	 	
Monthly fee for residential and commercial units

	
Gas

	$	
                             300.00

	 	
Monthly fee for 2 residential and 1 commercial units

	
Water

	$	
                      30.00

	 	
Monthly fee

	
Legal Services

	$	
            $20,000.00

	 	
Transaction cost

	
Mortgage

	$	
                      2,119.64

	 	
Paid on 20th of each month, inclusive of $10 wire transaction fee

	
Bullet proof glass

	$	
                    22,000.00

	 	
Pending invoice & discussions with manufacturer as his quote was lower

	
Bond Payment

	$	
 

	 	
TBD

	
Property taxes

	$	
                    5,000.00

	 	
Due June 2016Exhibit 10.19

 

 

 

PURPLE HAZE PROPERTIES CANNABIS PRODUCTS

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (hereinafter, this “Agreement”) is made and entered into effective as of June 5, 2015 (hereinafter, the “Effective Date”), by and between Purple Haze Properties LLC, a Nevada Limited Liability Company (hereinafter, “Licensor”), and Nutritional High a Canadian Company, (hereinafter, “Licensee”), (each individually a “Party” and collectively the “Parties.”)

RECITALS

(A) Licensor owns all proprietary rights in and to numerous copyrightable works, images, designs, and photographic images, all generally described as Jimi Hendrix based artwork, designs and products, branding, and concepts, including, but not limited to, the “Jimi’s Cannabis Collection” brand, the name "Jimi Hendrix" (to describe images and likenesses of Jimi Hendrix only but not the use of the Jimi Hendrix signature), all artwork currently found at http://www.rockinartwork.com/photos.htm (except photography by Karl Ferris), other artwork owned by Licensor related to Jimi Hendrix and all Jimi Hendrix’s song titles including those on albums by the Jimi Hendrix Experience (the “Song Titles”) (hereinafter collectively the “Works”), and has the right to license others to produce, copy, make, or sell the Works.

(B) Licensor owns all rights in and to the Works and retains all rights to the Works which are not transferred herein, and retains all common law copyrights and all federal copyrights which have been, or which may at some later date be granted by the Library of Congress, as well as all common law and federal trademarks exiting or later granted, as well as all goodwill or other proprietary interest.

 

(C) Licensee desires to obtain, and Licensor has agreed to grant, a license authorizing the use of the Works by Licensee in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, as set forth herein, Licensor and Licensee agree as follows:

1. Grant of License.

(A) Licensor hereby grants to Licensee, in accordance with the terms and conditions of this Agreement, an exclusive, non-transferrable (except as may otherwise be set forth herein), right and license to use the Works in the course of Licensees’ business, and to sell cannabis based products as set forth in the attached Schedule A and certain other products as may be agreed upon between Licensor and Licensee, bearing the Works, in the territory set forth in the attached Schedule A (hereinafter “Products”).

 

- 1 -

  

(B)   Licensee may use the Works in to sell cannabis and hemp-based products (including products containing cannabis and hemp extracts) and other products in schedule A, featuring photographic, and/or pictorial images, designs and/or artwork depicting Jimi Hendrix, and including use of the names “Jimi”, “Jimi’s Cannabis Collection”, the name "Jimi Hendrix" to describe Jimi Hendrix images and likenesses only (but not the Jimi Hendrix signature), and Jimi Hendrix Song Titles in connection therewith, as set forth below. The Parties agree that any and all materials, images, designs, or other trademark or copyrightable materials provided by Licensor to Licensee in connection with this Agreement, including use of the names “Jimi”, "Jimi Hendrix” to describe Jimi Hendrix images and likenesses only (but not the Jimi Hendrix signature), “Jimi’s Cannabis Collection”, and Jimi Hendrix Song Titles in connection therewith, shall fall under the definition of Works.  In addition to the use in packaging, marketing and other uses, Licensee may use the Works in conjunction with an Internet site for the promotion, advertisement and sale of Products bearing the Works as described herein.  Any other use of the Works shall be made by Licensee only upon the receipt of prior written approval from Licensor.

(C)  Licensee shall not grant sub-licenses to the Works without the prior written approval of Licensor, providing, however, that Licensee may provide limited sub-license rights in and to the Works to parties licensed by a relevant governmental authority to produce or manufacture marijuana oils or marijuana infused products, provided that such sub-license is limited to the production, sale and marketing of the Licensee’s marijuana products, and subject to strict quality control oversight and final approval by the Licensee and such sub-licensee shall be deemed fully bound to all terms, requirements, and conditions of this agreement.  Licensee will provide written notice of such sub-license to the Licensor.  Any pre-approved sub-licensees shall be set forth in the attached Schedule A and such sub-licensees shall be deemed fully bound to all terms, requirements, and conditions of this agreement.

(D)  Licensee hereby accepts such license and agrees that Licensee shall not use the Works except in accordance with the terms and conditions of this Agreement. Licensee acknowledges and agrees that the license granted herein is non-exclusive if designated as such in Schedule A, and that if the license is designated non-exclusive Licensor may license others to use the Works subject to any limitations set forth herein.

 

(E)  Packaging shall be designed by Licensee and subject to the express written permission and approval in all aspects of Licensor. Licensor shall have full access to any packager, including the unrestricted right to sales and pricing data in order to monitor quality and royalty volume. Upon the launch of Licensor’s national packaging program the Parties will negotiate a possible transition to Licensor’s packaging manufacturer and in any event renewal of this agreement will be contingent in participation in Licensors national packaging program.

- 2 -

 

2. Ownership of Works.

Licensee acknowledges that as between Licensee and Licensor, Licensor is the sole and exclusive owner of the Works and of all associated federal registrations and any pending or future registrations, and Licensee shall do nothing inconsistent with such ownership. Licensee further agrees that it will not claim ownership rights to the Works, or any derivative, compilation, sequel or series, or related Works owned by or used by Licensor.  Licensee agrees that nothing in this Agreement shall give Licensee any right, title, or interest in the Works other than the right to use the same in accordance with this Agreement.

3. Term and Termination.

(A)  This Agreement shall commence as of the Effective Date and shall continue in full force and effect for the period set forth in Schedule A, and shall be renewable at the Parties’ mutual agreement as set forth in Schedule A.

(B)  In the event that Licensee fails to maintain its good corporate standing Licensor, at its sole discretion, but subject to Licensee’s ability to cure, may immediately terminate this Agreement upon forty-five (45) days’ written notice.

(C)   In the event that Licensee seeks bankruptcy, either voluntarily or involuntarily, Licensor may, at its sole discretion, terminate this Agreement. Upon filing for, or being subjected to bankruptcy, Licensee shall name Licensor as a creditor for all royalties which are due, or may become due, under the terms of this Agreement.

(D)  In the event that Licensee fails to perform any material provision of this Agreement and fails to cure any such failure upon thirty (30) days’ written notice from Licensor, Licensor, at its sole discretion may immediately terminate this Agreement.

(E)  In the event that Licensor: (i) fails to perform any material provision of this Agreement and fails to cure any such failure upon thirty (30) days’ written notice from Licensee; (ii) loses its rights to the Works; or (iii) suffers a bankruptcy event or ceases to do business in the ordinary course, Licensee, at its sole discretion, may immediately terminate this Agreement.

 

(F)  Upon termination or expiration of the license granted under this Agreement by operation of law or otherwise, all rights (including the right to use the Works) privileges and obligations arising from this Agreement shall cease to exist, except for Licensee’s obligation to pay royalties to Licensor pursuant to the terms herein, and Licensor’s obligation to fully indemnify Licensee relative to its uses of the Works as set forth herein.

- 3 -

 

 

(G)  Upon termination of this Agreement, Licensor agrees to allow Licensee three (3) months to cease all use of the Works, including a reasonable time to change labels, packaging and advertising, and to deplete existing inventories of Products bearing the Works. Licensee agrees to discontinue use of the Works, upon termination of this Agreement, as quickly as practicable, and in no event longer than the time specified herein.

4. License Fees.

(A)  Throughout the term of this Agreement, and for any renewals or extensions of this Agreement, Licensee agrees to pay exclusivity fee, advance against royalties, and royalty for use of the Works.

Licensee shall pay an annual exclusivity fee if applicable and or advance against royalties for each territory or product as designated on Schedule A. Said exclusivity fee and advance of royalties will be as set forth in the attached Schedule A.

(B)  Licensee shall pay to Licensor a royalty of gross receipts received by Licensee from sales of Products bearing the Works. Royalties are to be paid within thirty (30) days of each quarter ending in the months of March, June, September and December, after deduction of any advance royalty paid. The royalties shall be as set forth in the attached Schedule A.

(C)  Licensee acknowledges that it is Licensor’s intent that some portion of proceeds to Licensor under this Agreement shall be held in benefit in the name of and for  bloodline relatives of Jimi Hendrix and his brother Leon Hendrix’s Family; however, the Parties expressly agree that Licensee shall have no obligation to make any payments of any kind to, nor have any other obligations of any kind with respect to such donation.

 

(D)  Failure of Licensee to make any payment required under this Agreement when such payment is not in dispute and is due and payable, shall be considered a breach of this agreement and be cause to terminate this Agreement; however, License shall have ten days to cure the breach upon receipt of written notice from Licensor.  If Licensee fails to cure any such breach during this period, then Licensor will provide written notice to Licensee of termination of this Agreement for failure to make a required payment.

(E) Licensee shall provide to Licensor quarterly activity reports, as well as summary quarterly activity reports.  Such activity reports shall accompany such royalty payments as described herein in this Section 4.  Moreover, Licensor reserves the right to examine and inspect only those books and records of account of Licensee directly related to the Works, during the normal business hours of Licensee upon written notice given by Licensor to Licensee of not less than fifteen (15) calendar days. Failure by Licensee to provide such activity reports or access to books and records of account to Licensor within fifteen (15) days of receipt of written notice is grounds for immediate termination of this Agreement.

- 4 -

 

5. Use of Works.

(A)  Licensor shall have control over the quality of use of the Works and the quality of Products bearing the Works. At the option and express written direction of Licensor, for all advertisements and packaging of the Works, Licensee shall (i) display with the Works an approved symbol notifying the consumer of the copyright and/or trademark rights owned by Licensor, and licensed within this Agreement.  Licensor will provide to Licensee an approved copyright notice to be prominently displayed on each copy of the Works published. Licensee agrees to (ii) mark all Works with any reasonable copyright and/or trademark notices provided by Licensor and (iii) comply with any reasonable standards promulgated by Licensor that relate to the use of the Works by Licensee.  Notwithstanding the foregoing, nothing in this Agreement shall be construed to obligate Licensee to repackage, re-label, or otherwise modify any existing Products, packaging, advertising or other materials relative to the Works, that may already be in circulation.

(B)  Upon execution of this Agreement, Licensee shall advise Licensor prior to making any change or modification to the Works, and Licensee shall provide Licensor, upon Licensor’s written request, with representative samples of Licensee’s use of the Works, including copies or examples of how the Works are used on Licensee’s Internet site.  If, at any time, any use of the Works fails to conform to industry standards set by Licensor and communicated by Licensor to Licensee, Licensor may provide to Licensee written notice of said failure. Licensee shall undertake reasonable corrective action to cure said failure within thirty (30) days from the date of such notice, or such longer period as may be reasonably necessary to cure said failure, so long as Licensee is diligently pursuing the cure.  In the event that said failure is not cured within the period described in the preceding sentence, Licensor may then terminate this Agreement immediately. If Licensor fails to approve any modifications or changes to the Works within ten (10) days of Licensee advising Licensor of the proposed changes, Licensor’s approval shall be deemed to have been granted.

(C)  Upon termination of this Agreement for any reason, Licensee shall be entitled to sell, distribute, or otherwise dispose of any existing inventory of the Works, but shall otherwise discontinue immediately all use of the Works, cooperate with Licensor in applying to the appropriate authorities to cancel recordation, if any, of this Agreement from all government records, and all rights in the Works and the goodwill appurtenant thereto shall revert to and remain the property of Licensor.

- 5 -

  

6. Indemnification.

 

    (A)  Licensee shall fully indemnify, defend, and hold harmless Licensor from and against any and all suits, allegations, claims, liabilities, losses, damages, costs, and expenses (including but not limited to attorneys’ fees), other than those for allegations of infringement or relative to Licensor’s rights to the Works including suits arising from offering, promoting, advertising, sale, or use by Licensee of the Works, whether or not such use conforms to standards set by Licensor, provided that such claim, loss, damage, expense, or liability does not arise from the Works as provided by Licensor to Licensee, or the negligence, errors, acts, or omissions Licensor.

(B)  Licensor shall fully indemnify, defend, and hold harmless Licensee from and against any and all suits, allegations, claims, liabilities, losses, damages, costs and expenses (including but not limited to attorneys’ fees), arising from or relating to claims of trademark, trade dress, or copyright infringement, unfair competition, violations of  publicity/privacy rights, contractual claims, or any other claims arising from or related to the Works as provided by Licensor to Licensee, or as approved by Licensor.  Licensor does not agree to indemnify Licensee for claims of copyright infringement or trade dress infringement arising from the appearance or design of the packaging and advertising for the Works where such claims relate not to the Works, but to other material which has been created, or is owned, by Licensee.

 

(C)  Licensor has the right, but shall not be obligated, to maintain federal copyright and/or trademark registration(s) for the Works. In the event that Licensee becomes aware of any claimed or alleged infringement of the Works by a third party, Licensee shall promptly advise Licensor in writing of the nature and extent of such infringement or dilution. Licensor has no obligation to take any action whatsoever in the event that any infringement or dilution occurs with respect to the Works, but Licensor shall have the sole right to determine whether any action shall be taken. In the event Licensor sues or takes other action, legal, equitable, administrative, or otherwise, to stop an infringement or dilution of the Works, Licensee shall cooperate fully with Licensor, at Licensor’s expense, and Licensee shall not be obligated to pay any costs or expenses. Licensee has no right to enforce the Works through litigation without prior written authorization of Licensor. In any legal action arising from use, or ownership rights of the Works, where both Licensor and Licensee are co-parties, Licensor retains the right to control the litigation, including any and all settlement negotiations, except that Licensor may not admit liability on behalf of Licensee, nor may Licensor obligate Licensee to any financial penalties, fines, damages or any other obligations, without Licensee’s express written consent..

 

7. Assignment.

This Agreement (including, without limitation, the license granted hereunder) is personal to Licensee and shall not be assigned or transferred by Licensee, including, without limitation, by operation of law, except that, with prompt written notice to Licensor, the Agreement may be transferred to a purchaser of all or substantially all of the assets of Licensee. Any attempt on the part of Licensee to assign, sub-license, or transfer Licensee’s rights under this Agreement, except as provided herein, shall be invalid and void. Licensor shall have the right to assign its rights and obligations under this Agreement and all its right, title and interest in the Works without the consent of Licensee.

- 6 -

 

 

8. Validity of Works.

Licensee agrees not to challenge the validity of all copyrights for the Works and all associated registrations and acknowledges that any and all rights that might be acquired by Licensee because of its use of the Works shall inure to the sole benefit of Licensor, provided that this Section 8 shall not entitle Licensor to all or any portion of the profits or revenues from Licensee’s permitted uses hereunder, except for the License Fees as described herein above in Section 4.

9. Notices.

 

    Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing and delivered personally or by registered or certified mail, return receipt requested, with postage prepaid and addressed to the following persons and addresses, or to such other addresses or persons as any Party may request by notice in writing to the other such Party:

Licensee:

As set forth in the attached Schedule A

Licensor:

Purple Haze Properties

8265 Sunset Blvd. Suite 100

West Hollywood CA, 90046

Any such notice shall be effective when received.

10. Insurance.

Upon the reasonable request of Licensor, Licensee agrees to provide to Licensor, within 30 days prior to commencement of sales of product, proof of general liability insurance, in any minimum amount which is required by the State in which Licensee is incorporated. Said insurance policy shall provide coverage to any third party for injuries claimed to arise from the Products advertised and sold by Licensee which relate to the Works and shall also contain a general advertising liability clause, insofar as such clause is allowed by Federal or State law. The insurance policy shall provide coverage to Licensee for indemnification of Licensor under the terms of Section 6 herein.

- 7 -

 

11. Arbitration, Venue, Governing Law.

All disputes arising from the terms of this Agreement may be subjected to binding arbitration upon the written consent of both parties, with one arbitrator selected by each Party, and a third arbitrator selected by the two chosen arbitrators. This Agreement shall be governed by and construed in accordance with, the laws of the State of Washington without regard to the conflicts of laws rules thereof and any arbitration, litigation, or other formal action, shall be brought in Pierce County, Washington using Washington State laws.

12. Independent Business Relationship.

Licensor and Licensee are independent contractors and are not and shall not be construed as joint venturers, partners, employer/employee, or agents of the other, and neither shall have the power to bind or obligate the other, except as set forth in this Agreement.

13. Miscellaneous.

 

(A)  This Agreement constitutes the entire agreement and understanding of the Parties with respect to the subject matter hereof, superseding any and all prior agreements, understandings, negotiations, and discussions. No amendment, alteration, modification, or waiver of this Agreement shall be binding unless evidenced by an instrument in writing signed by the Party against whom enforcement thereof is sought.

(B)  In the event it becomes necessary for either Party to file a suit to enforce this Agreement or any provisions contained herein, and either Party prevails in such action, then such prevailing Party shall be entitled to recover, in addition to all other remedies or damages, reasonable attorney’s fees and court costs incurred in such suit.

(C)  If any provision of this Agreement, or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provisions to any other persons or circumstances, shall not be affected thereby.

(D)  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.

[SIGNATURE PAGE TO FOLLOW]

 

- 8 -

 

IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of the Effective Date.

 

	
 

	

LICENSEE:

NUTRITIONAL HIGH INTERNATIONAL INC.

 

By:                 /"Signed"/ David Posner                       

Name: David Posner

Title: CEO

	
 

	
 

	
 

	

LICENSOR:

PURPLE HAZE PROPERTIES, LLC

 

By:                 /"Signed"/ Andrew Pitsicalis                  

ANDREW PITSICALIS, CEO - President

 

 

- 9 -

 

 

 

SCHEDULE A

To License Agreement

 

Schedules Annexed to and made part of the License Agreement dated as of June 5, 2015 between Purple Haze Properties LLC (“LICENSOR”) and Nutritional High International Inc.  (“Licensee").

	The Property:	Jimi Hendrix images, Likenesses, and Original Artwork, IP and Lifestyle Branding, including “Jimi’s Cannabis Collection”, the name "Jimi Hendrix" (to describe images and likenesses of Jimi Hendrix only but not the Jimi Hendrix signature), all artwork currently found at http://www.rockinartwork.com/photos.htm (except photography by Karl Ferris), other artwork owned by Licensor related to Jimi Hendrix and all Jimi Hendrix’s song titles including those on albums by the Jimi Hendrix Experience (the “Song Titles”).

	Licensed Products:	Jimi’s Cannabis Collection - Products, Detailed Below, including hemp and cannabis (including hemp and cannabis extracts) under the terms set forth above, AND JCC Branded & Approved - Apparel, Accessories & Collectables on a non-exclusive basis

	Territory:	Canada and the United States

	Product 1 - 	Gummy Bears (including other figures)	- Exclusive

	Product 2 -	Hard Candy (Wrapped, No-Stick) - Exclusive

 

	Product 3 -	"Vitamin Water" style products (including health and energy supplements in the water) - Exclusive

 

	Term:	5 years, commencing the earlier of the first product sale or October 1, 2015

 

	Renewal Term:	One 5-year renewal as set forth in the license agreement above.

 

	Royalty:	15% of Sales received by Licensee

 

	Minimum Royalty:	$200,000 annual exclusivity fee $50,000 advance on royalties - Total $250,000 due upon signed contract;

	Currency: 	US Dollars

 

	Number of Samples of Each Licensed Product: 	6 of each

 

	Sell-Off Period: 	90 days after expiration of the License Agreement.

 

	Insurance: 	$2,000,000.00

 

	Channels of Distribution:	All

 

- 10 -

Pre-Approved Sub-Licensees: Palo Verde LLC and a beverage company to be established by Jeff Maser, but contract must be presented and approved by PHP

Notices to:

Nutritional High International Inc.

77 King Street West

P.O. Box 121, Suite 2905

Toronto, ON M5K 1H1

Payment via Stock Allowed for Exclusivity and Advance only:

At the option of the Licensee, the exclusivity fee and the royalty advance may be payable in common shares of the Licensee (with a four (4) month restriction under Canadian securities laws) for the equivalent of all US Dollars, based on the volume-weighted average trading price of the common shares of the Licensee for the ten trading days prior to the date of execution and anniversary dates thereafter.  All other payments by Guaranteed Funds.

 

 

Purple Haze Properties LLC Cannabis Licensing Agreement

- 11 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}]]