Document:

ex_171452.htm

 

Exhibit 4.5

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

GREENBOX POS 

CONVERTIBLE PROMISSORY NOTE

 

	
			Principal Amount: $150,000 USD

				
			December 27, 2018

			

 

 

WHEREAS on December 27, 2018, 102065761 SASKATCHEWAN LTD., with its offices at 230-22nd St E. Suite 800. Saskatoon, Saskatchewan, Canada. S7K 0E9 (the “Holder”) loaned funds totaling, $150,000 to GreenBox POS a Nevada corporation with its office at 8880 Rio San Diego Drive, Suite 102, San Diego. CA 92108 (the “Company”). Payment for the loan was made directly to the Company in the form of a Wire Transfer as follows:

 

$150,000 USD deposit, wired directly to Bergerman Smith, LLP (“Bergerman Smith”) client trust account with “for the benefit of GreenBox POS” in the memo line via wire transfer.

 

This money shall be held in the Bergerman Smith client trust account until receipt of an executed copy of this note. Upon receipt of the executed Note, Berman Smith shall pay the $150,000.00 USD to Company via wire transfer pursuant to the following wire instructions:

 

U.S. Bank N.A.

425 Walnut Street

Cincinnati, OH 45202

 

Swift code: 

Account #

Routing #

 

WHEREAS the Company and Holder further agreed that such services provided by the Holder to the Company would be evidenced in a convertible note, which convertible note would be convertible into shares of common stock of the Company at the rate of 50% of the closing price of the stock on the day of conversion, in accordance with Section 3 below;

 

NOW THEREFORE THIS AGREEMENT WITNESSES that for and in consideration of the mutual premises and the mutual covenants and agreements contained herein, the parties covenant and agree each with the other as follows:

 

 

 

 

1.     Principal and Interest.

 

1.1     The Company, for value received, hereby promises to pay to the order of the Holder, the sum of One Hundred & Fifty Thousand Dollars ($150,000.00) USD, which amount represents the amount owed to Holder as of the money being transferred and deal closing.

 

1.2 This Convertible Promissory Note (the “Note”) shall bear twelve percent (12%) interest per annum. This Note shall be payable upon demand (“Demand Date”). Commencing on the Demand Date, all principal shall be payable by the Company upon demand made by the Holder. The Demand Date shall be any time after 12 months from the closing of this note that the Holder designates at their sole discretion. The Note is for a period of (12) months The Principal Amount and all accrued and unpaid interest, if not otherwise converted, will be paid in full on December 21, 2019 unless earlier demand is made.

 

1.3     The Company shall make quarterly interest payments to holder in advance of the quarter, the quarterly interest prepayments shall be in the amounts and on the dates listed below:

 

$3856.00 on December 27,2018

$3856.00 on February 27, 2019

$3856.00 on May 27, 2019

$ 3856 on August 27, 2019

 

1.4     At any time prior to the Demand Date, the Company may prepay and satisfy its obligations under this Note by paying to Holder the principal and any outstanding unpaid interest.

 

1.5     Upon payment in full of the principal and interest, or conversion, this Note shall be surrendered to the Company for cancellation.

 

1.6     The principal under this Note shall be payable at the principal office of the Company and shall be forwarded to the address of the Holder hereof as such Holder shall from time to time designate.

 

2.     Attorney's Fees. If the indebtedness represented by this Note or any part thereof is collected in bankruptcy, receivership or other judicial proceedings or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal payable hereunder, reasonable attorneys' fees and costs incurred by the Holder.

 

	 	
			3.

				
			Conversion.

			

 

	 	
			3.1

				
			Voluntary Conversion.

			

 

3.1.1     Pre-Term Conversion. Holder shall have the right any time after six months from Closing, to convert the outstanding principal and accrued and unpaid interest into a number of

 

 

 

 

fully paid and non-assessable whole shares of the Company's $0.001 par value Series B common stock (“Common Stock”) determined in accordance with Section 3.2 below.

 

Similarly, the Company shall have the right any time prior to the Demand Date, to convert the outstanding principal and unpaid interest into a number of fully paid and non- assessable whole shares of the Company's $0.001 par value Series B common stock (“Common Stock”) determined in accordance with Section 3.2 below.

 

If the Holder or Company elects to convert prior to the Demand Date, any interest accrual upon the principal shall cease on the date of conversion, and Company shall not be obligated to make any future interest payments. The note shall be satisfied in accordance with section 1.5.

 

3.1.2     Post Term Conversion. The Holder shall also have the right any time after the expiration of the Demand Date, exercisable in whole or in part, to convert the outstanding principal and accrued and unpaid interest into a number of fully paid and non-assessable whole shares of the Company's $0.001 par value Series B common stock (“Common Stock”) determined in accordance with Section 3.2 below.

 

3.2     Shares Issuable. The number of whole shares of Common Stock into which this Note may be voluntarily converted (the “Conversion Shares”) shall be determined by taking the closing price of the shares of GreenBox POS on the day of conversion and discounting the price by 50% (the “Note Conversion Price”); provided, however, that, in no event, shall Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common stock beneficially owned by Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of this Note or the unexercised or unconverted portion of any other security of Maker subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of common stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in the beneficial ownership by Holder and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 and Regulation 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the Note Conversion Price. The Term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus, (2) at the Company's option, accrued and unpaid interest, if any, on such principal amount at the interest rate provided in this Note to the conversion date, provided; however, that the Company shall have the right to pay any or all interest in cash.

 

3.3     Notice and Conversion Procedures. After receipt of demand for repayment, the Company agrees to give the Holder notice at least five (5) business days prior to the time that the Company repays this Note. If the Holder elects to convert this Note, the Holder shall provide the Company with a written notice of conversion setting forth the amount to be converted. The

 

 

 

 

notice must be delivered to the Company together with this Note. Within twenty (20) business days of receipt of such notice, the Company shall deliver to the Holder certificate(s) for the Common Stock issuable upon such conversion and, if the entire principal amount was not so converted, a new note representing such balance.

 

	 	
			3.4

				
			Other Conversion Provisions.

			

 

(a)     Adjustment of Note Conversion Price. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a reverse stock split and subdivision of the Company's issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately increasing the Note Conversion Price on the date that such subdivision shall become effective. In the event the Company shall in any manner, subsequent to the issuance of this Note, approve a reclassification involving a forward stock split and subdivision of the Company's issued and outstanding shares of Common Stock, the Note Conversion Price shall forthwith be adjusted by proportionately decreasing the Note Conversion Price on the date that such subdivision shall become effective.

 

(b)     Common Stock Defined. Whenever reference is made in this Note to the shares of Common Stock, the term “Common Stock” shall mean the Common Stock of the Company authorized as of the date hereof, and any other class of stock ranking on a parity with such Common Stock. Shares issuable upon conversion hereof shall include only shares of Common Stock of the Company.

 

3.5     No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Holder upon the conversion of this Note, the Company shall pay to the Holder the amount of outstanding principal hereunder that is not so converted.

 

4.     Representations, Warranties and Covenants of the Company. The Company represents, warrants and covenants with the Holder as follows:

 

(a)     Authorization; Enforceability. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Note and the performance of all obligations of the Company hereunder has been taken, and this Note constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b)     Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with. any local, state or federal governmental authority is required on the part of the Company in connection with the Company's valid execution, delivery or performance of this Note except any notices required to be filed with the Securities and Exchange Commission under Regulation D of the Securities Act of 1933, as amended (the “1933 Act”), or such filings as may

 

 

 

 

be required under applicable state securities laws, which, if applicable, will be timely filed within the applicable periods therefor.

 

(c)     No Violation. The execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby will not result in a violation of its Certificate of Incorporation or Bylaws, in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or, to the best of its knowledge, of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

 

(d)    Registration. On conversion, Company will register with the Securities and Exchange Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the “1934 Act”), or will file reports pursuant to Section 15(d) of the 1934 Act, or otherwise cause a registration statement covering the securities under the 1933 Act to be in effect when the Investor desires to sell the Shares following any applicable hold period(s) they will be freely tradable and without any hold or legend restriction whatsoever.

 

5. Representations and Covenants of the Holder. The Company has entered into this Note in reliance upon the following representations and covenants of the Holder:

 

(a)     Investment Purpose. This Note and the Common Stock issuable upon conversion of the Note are acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)     Private Issue. The Holder understands (i) that this Note and the Common Stock issuable upon conversion of this Note are not registered under the 1933 Act or qualified under applicable state securities laws, and (ii) that the Company is relying on an exemption from registration predicated on the representations set forth in this Section 8.

 

(c)     Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

6.     Assignment. Subject to the restrictions on transfer described in Section 8 below, the rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

7.     Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Holder.

 

 

 

 

8.     Transfer of This Note or Securities Issuable on Conversion Hereof. With respect to any offer, sale or other disposition of this Note or securities into which this Note may be converted, the Holder will give written notice to the Company prior thereto, describing briefly the manner thereof. Unless the Company reasonably determines that such transfer would violate applicable securities laws, or that such transfer would adversely affect the Company’s ability to account for future transactions to which it is a party as a pooling of interests, and notifies the Holder thereof within five (5) business days after receiving notice of the transfer, the Holder may effect such transfer. The Note thus transferred and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the 1933 Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the 1933 Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions.

 

9.     Notices. Any notice, other communication or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery if personally delivered or three (3) business days after deposit if deposited in the United States mail for mailing by certified mail, postage prepaid. Each of the above addressees may change its address for purposes of this Section by giving to the other addressee notice of such new address in conformance with this Section.

 

10.     Governing Law. This Note is being delivered in and shall be construed in accordance with the laws of the State of California, without regard to the conflicts of law provisions thereof.

 

11.     Heading; References. All headings used herein are used for convenience only and shall not be used to construe or interpret this Note. Except as otherwise indicated, all references herein to Sections refer to Sections hereof.

 

12.     Waiver by the Company. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

13.     Delays. No delay by the Holder in exercising any power or right hereunder shall operate as a waiver of any power or right.

 

14.     Severability . If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

 

15.     No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Note and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Note against impairment.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, GreenBox POS, LLC has caused this Note to be executed in its corporate name and this Note to be dated, issued and delivered, all on the date first above written.

 

 

 

	 	 	
			GREENBOX POS, LLC

			
	 	 	 
	 	 	 
	
			Date: December 27, 2018

				
			By: 

				
			/s/ Fredi Nisan                                                 

			
	 	 	
			Fredi Nisan

			
	 	
			Title: 

				
			CEO & Director

			
	 	 	 
	 	 	 
	 	
			By: 

				
			/s/ Ben Errez                                                   

			
	 	 	
			Ben Errez

			
	 	
			Title: 

				
			EVP & Director

			
	 	 	 
	 	 	 
	 	 	
			102065761 SASKATCHEWAN LTD.

			
	 	 	 
	 	 	 
	
			Date: December 27, 2018

				
			By: 

				
			/s/ Ivan Bergerman                                          

			
	 	 	
			Ivan Bergerman

			
	 	
			Its: 

				
			Director

			
	 	 	 
	 	 	 
	 	
			By:

				                                                                        
	 	 	 
	 	
			Its:

				
			Directorex_171454.htm

Exhibit 10.5

 

Software License and Services Agreement with Exclusivity

 

This software license and services agreement (“Agreement”) is by and between GreenBox POS, LLC (“GreenBox”), a Nevada corporation, having its principal place of business at 8880 Rio San Diego Drive Suite 102 San Diego, CA 92106, Cultivate Technologies, LLC (“Cultivate”), a Nevada Limited Liability Company, having its principal place of business at 3333 East End Ave, Chicago, IL, 60411 and MTrac Tech Corp. (“MTrac”), A Nevada Corporation having its principal place of business at 1835 Sunset Cliffs Blvd. Ste 202 San Diego Ca 92107 (individually each a “Party” collectively the “Parties”).

 

This Agreement sets forth the terms and conditions upon which GreenBox and Cultivate will provide an exclusive license for use of its proprietary point of sale and payment gateway software that supports standardized banking functions for the business participants, e-wallet system, private blockchain ledger, and blockchain payment gateway (“Software”) and certain support services to MTrac in exchange for referral and agent management services for cannabis related transactions. GreenBox and Cultivate will provide a limited, non-exclusive license for all other low and high-risk retail transactions. Retail in this agreement shall mean any location that is taking card present (face to face) transactions . GreenBox and Cultivate will extend a limited license to all e-commerce accounts referred by MTrac.

 

RECITALS

 

Whereas:

 

	 	
			A.

				
			GreenBox is in the business of enabling consumer purchases using cash, credit and debit cards, while supporting standardized banking functions for the business participants, using proprietary payment systems.

			

	 	
			B.

				
			Cultivate has developed proprietary point of sale software and is in the business of providing retail point of sale operations, 24/7 support of said software and software and hardware related to credit and debit card processing on site (card present transactions).

			

	 	
			C.

				
			MTrac is a Company and also an Independent Sales Organization (ISO), marketing and managing point of sale transactions for Retail Locations for High Risk Merchants and managing third party agents that have relationships and contacts with these merchant types.

			

	 	
			D.

				
			MTrac initially entered into a joint venture agreement with GreenBox on February 1, 2018 and paid an initial sum of $360,000 on March 16, 2018 as a part of joint venture agreement (the “Joint Venture” ).

			

	 	
			E.

				
			As a part of the joint venture agreement GreenBox Paid $90,000 to MTrac for marketing and other services.

			

	 	
			F.

				
			MTrac was unable to meet the requirements of the Joint Venture agreement and was unable to conduct marketing and other activities on GreenBox's behalf, the Parties agreed to terminate such agreement and apply funds paid to date to a license of the Software with $360,000 due yearly as a licensing fee. This agreement was formally memorialized June 12, 2018. $270,000 of the amount paid by MTrac was applied to the license agreement with the remaining $90,000 subject to reimbursement to GreenBox, by December 31, 2018.

			

	 	
			G.

				
			An additional $90,000.00 was paid by MTrac to GreenBox on November 6, 2018, and GreenBox agrees and acknowledges that the term of the license has been paid through June 12, 2019.

			

	 	
			H.

				
			Due to the changing nature of the relationship between the parties, the parties desire to revoke all prior agreements and enter into this new agreement.

			

	 	
			I.

				
			The parties wish to enter into an arrangement on the terms and conditions contained in this Agreement.

			

 

Page 1 of 15

 

 

In consideration of the mutual promises, covenants, warranties and representations set forth herein, the parties agree as follows:

 

ARTICLE 1: SCOPE OF LICENSE

 

	
			1.1

				
			Grant of License

			

 

GreenBox and Cultivate hereby grant to MTrac an exclusive license to use and market the software to any retail/face to face cannabis-related business, retail/face to face CBD stores that use Cultivate software on site, and other high-risk retail stores that use Cultivate software on-site. With regard to e-commerce, internet sales, or other online referral businesses not related to any retail/face to face cannabis-related business, retail/face to face CBD stores, and other high-risk retail stores that use Cultivate software on-site, GreenBox grants Mtrac a non-exclusive license to the Software. The distribution of revenue for e-commerce, internet sales, or other online referral businesses under the non-exclusive license shall be governed by Exhibit A.

 

	
			1.2

				
			Intellectual Property Ownership

			

 

The Software is the intellectual property of and is owned by GreenBox and Cultivate respectively. The structure, organization and code of the Software are the valued trade secrets and confidential information of GreenBox and Cultivate. This Agreement does not grant MTrac any intellectual property rights in the Software except those that are expressly granted. In the co- development of all process and procedures, operational developments, training, on-boarding of Merchants, forms and contracts, due diligence, compliance, government relations, or any other rights not expressly granted are reserved for consideration as Joint Intellectual property of MTrac, GreenBox, and Cultivate. MTrac reserves the rights to their Independent Intellectual Property as it pertains to the evolving business model supported by GreenBox and Cultivate.

 

Any such intellectual property, trade secret, technology, procedure or contact shall remain an asset of the providing Party except for the licensing rights granted by this Agreement. Upon termination of this Agreement these assets shall be returned to the Party that provided the assets. The other Parties may not utilize it in any other of its affiliated activities during the duration of this Agreement nor any of its affiliated activities after the termination of this Agreement.

 

	
			1.3

				
			Restrictions

			

 

MTrac shall not attempt to copy, modify, adapt, duplicate, reproduce or translate the Software without the prior written consent of GreenBox and/or Cultivate. MTrac shall not reverse engineer, decompile, disassemble or otherwise attempt to discover the source code of the Software.

 

	
			1.4

				
			Transfer

			

 

MTrac may not assign this Agreement and/or any rights and/or obligations hereunder without the prior written consent of GreenBox and Cultivate, and any such attempted assignment shall be void. Any request for the transfer of the license shall be submitted to GreenBox Pos, LLC 8880 Rio San Diego Dr. San Diego, CA 92108 and Cultivate Technologies at 3333 East End Ave, Chicago, IL, 60411.

 

Page 2 of 15

 

 

ARTICLE 2: PERFORMANCE OF SERVICES

 

	
			2.1

				
			MTrac Services and Duties

			

 

MTrac shall perform the following services.

 

	
			2.1.1

				
			Marketing and Promotion

			

 

MTrac shall make reasonable efforts to promote and market GreenBox's and Cultivate's payment solutions and the Software to merchants and agents under the white-labeled name of MTracTM. Merchants for the purposes of this agreement shall be defined as retail cannabis-related businesses, including delivery services taking curbside cannabis transactions and any retail business using the Cultivate software on-site or by means of delivery. Agents for the purpose of this agreement shall mean people who help assist in engaging with, closing, account openings, or on-boarding of merchants.

 

	
			2.1.2

				
			Agent, Independent Sales Organization, Referral Management .

			

 

MTrac shall manage and maintain all relationships with Merchants, Independent Sales Organizations (“ISOs”), Agents, and Clients. The management and maintenance of the relationships shall include but is not limited to:

 

 

	 	
			A)

				
			Responding to all calls and emails from Merchants, ISOs, Agents, and Client within reasonable time frames. Reasonable time frames shall be at minimum within two business days.

			

	 	
			B)

				
			Overseeing and facilitating the execution of agent, ISO, or client agreements using Co-developed standardized forms.

			

	 	
			C)

				Providing client and agent training on procedures, troubleshooting, and basic support (not defined as technical support which should be provided by Cultivate) for use of GreenBox and Cultivate equipment and software.

	 	
			D)

				
			Order equipment for High Risk Marijuana Retail Dispensaries from Cultivate.

			

	 	
			E)

				
			MTrac shall provide to GreenBox completed application and KYC documentation for each merchant under this agreement.

			

	 	
			F)

				
			Ensure that all Merchants agreements include both debit and credit processing, which GreenBox is responsible for monitoring and ensuring dual processing types. It is understood that processing of either type is never guaranteed. Should GreenBox lose all of its banking power it will use its best efforts within reason to solidify further processing.

			

 

	
			2.1.3

				
			Equipment Costs

			

 

Equipment costs shall be the responsibility of MTrac to collect from all merchants. Cultivate will invoice at net 15 term s. Net 15 terms shall mean that the payment of the invoice shall be received by Cultivate within 15 days of shipment of the equipment to the merchant. If any payment is not made, Cultivate reserves the right to de-activate the equipment it shipped until payment has been rendered.

 

If MTrac elects to provide equipment to Merchants at a discount, they shall nonetheless remain responsible to Cultivate for the full cost of the equipment.

 

	
			2.1.4

				
			Agent, ISO, and Referral fees.

			

 

Page 3 of 15

 

 

MTrac shall be solely responsible for the payment of any Agent, ISO, and/or referral fees. GreenBox and Cultivate are responsible for the proper coding and facilitation of Agent, ISO, and referral fees debited in accordance with their multi-level wallets and in accordance with how MTrac designates the amounts in which the agents will be paid.

 

	
			2.1.5

				
			Demonstrations

			

 

MTrac shall provide both online and in person demonstrations as reasonably requested by Agents, ISO, and Clients. Such demonstrations shall not deviate from the co-developed materials created by MTrac, GreenBox, and Cultivate. All marketing materials must be approved by GreenBox and Cultivate in writing prior to giving to merchants and/or agents. GreenBox and Cultivate will have 2 business days to accept or propose any material changes to marketing . MTrac shall not expand upon or promise any capabilities of the Software beyond what has been provided by GreenBox and Cultivate.

GreenBox and Cultivate will make its best efforts to provide MTrac with updates to its software that effect live operations.

 

	
			2.1.6

				
			Merchant and Agent Indemnification.

			

 

In addition to the indemnification provision, section 7.4 of this agreement, Mtrac shall indemnify, defend and hold GreenBox, Cultivate, and their assignees, agents, officers and employees harmless any claims, suits, proceedings, costs, liabilities, expenses (including court costs and reasonable legal fees), or damages (Claims) to real or tangible personal property and/or bodily injury to persons, including death, resulting from the usage of the Software by agents, ISOs, Merchants, and any other third parties referred to GreenBox and Cultivate by Mtrac .

 

	
			2.2

				
			Cultivate services and duties

			

 

Cultivate shall perform the following services under this agreement.

 

	
			2.2.1

				
			Equipment Procurement and Configuration.

			

 

Cultivate will procure and configure terminals, iPads, stands and cables (the “Equipment') for use by Merchants. Cultivate will deliver the Equipment directly to the Merchants. Cultivate is responsible for all shipping costs associated with delivery to merchants. Cultivate will ship all Equipment via 2 day air , if faster delivery is requested by MTrac, Mtrac shall be assessed a fee of One Hundred Dollars ($100.00) per station charge for the faster delivery.

 

Cultivate will maintain each material item of Equipment in good working order and condition (reasonable wear and tear and obsolescence excepted), and in accordance in all material respects with any manufacturers manual, and will timely provide all maintenance, service and repairs reasonably necessary.

 

	 	
			2.2.2

				
			Hardware Set Up and Delivery

			

 

Cultivate will manage the initial set up and deployment of the hardware to merchants.

 

	 	
			2.2.3

				
			24/7 Technical Support and Trouble Shooting

			

 

Cultivate will provide, at no additional cost, full and complete technical assistance to Merchants for the Equipment covered by this Agreement, including ongoing remote technical support and to assist

 

Page 4 of 15

 

 

 

with installation, operation, maintenance, and problem resolution. Technical support, including emergency support (service affecting) will be provided by Cultivate 24 hours a day 7 days a week. Cultivate will also maintain a TEXT support line where customers can text support phone a phone call not be available due to noise or other reasons on location. Cultivate will also be responsible for the warranty of any equipment that malfunctions that is still under warranty.

 

	
			2.3

				
			GreenBox Services and Duties

			

 

GreenBox shall perform the following services.

 

	
			2.3.1

				
			Transaction Services.

			

 

	
			2.3.1.1

				
			Processing.

			

 

GreenBox shall provide credit and debit card processing services to Merchants referred by MTrac. Greenbox shall maintain necessary licensing and internal controls as it deems necessary to carry out its duties under this agreement at its sole discretion.

 

	
			2.3.1.2

				
			Monitoring .

			

 

GreenBox will monitor its systems to assure proper funding to proper wallets and or other locations such as bank accounts is being done properly. GreenBox is responsible for the accurate accounting of all merchant and affiliated account s. It is GreenBox's responsibility to monitor all activity and take appropriate course of action in the review of all merchant accounts

 

	
			2.3.1.3

				
			KEYs.

			

 

GreenBox shall create Merchant Keys (“KEYs”) to Cultivate for configuration to Cultivate clients.  Keys will be defined as the needed credentials for a merchant to go live and start transacting.

 

	
			2.3.1.3

				
			eWallets.

			

 

GreenBox shall be responsible for providing the eWallet technology and payment infrastructure, including all of its parts and modules used by Merchants in this agreement. These wallets will be maintained at all times by GreenBox. GreenBox will designate support agents to MTrac to provide non- confidential information as it pertains to any functionality within the wallet, including transferring of funds, reporting , report review and analysis, and checks and bala ncing. GreenBox will be responsible for responding to MTrac in a reasonable amount of time.

 

	
			2.3.1.4

				
			Deposit Management.

			

 

GreenBox shall manage deposits to Merchant's bank accounts for those exiting their platform. MTrac shall not be held responsible for any loses related to merchant funds within the GreenBox ecosystem so long as any such loss is not a result of MTrac's negligence, act, or omission.

 

	
			2.3.2

				
			Software Maintenance.

			

 

GreenBox shall provide to Cultivate and MTrac updates and changes to the Software which may be necessary in order to ensure that the Software functions according to its intended purpose. Such enhancement may include modifications to the Software and changes to the software. Greenbox shall

 

 

Page 5 of 15

 

 

respond to any requests to modify the software due to an error or malfunction if it effects more than 20% of the customers within a reasonable period of time.

 

ARTICLE 3: WARRANTIES

 

	
			3.1

				
			Warranty of Title

			

 

GreenBox and Cultivate hereby represents and warrants to MTrac that they are the owners of the Software or otherwise has the right to grant to MTrac the rights set forth in this Agreement, including without limitation, any third-party software, data and materials included in the Software.

 

	
			3.2

				
			Warranty of Functionality

			

 

GreenBox and Cultivate warrant that, for the entire term of this Agreement, the Software shall perform in all material respects according to the specifications concerning the Software. Cultivate will insure that the appropriate computer equipment is used at the GreenBox hosting facility to operate the Software. GreenBox will insure that the Software will maintain compatibility with current and future versions of Microsoft Internet Explorer.

 

	
			3.3

				
			Warranty of Performance

			

 

All of the parties represent and warrant that all services provided under this Agreement will be performed promptly in a good and workmanlike manner consistent with best industry practices and in accordance with the service level standards. If performance is not met within reasonable timeframe for business conducive to maintaining accounts in good standing the under-performing party may be liable.

 

	
			3.4

				
			Warranty of Authority

			

 

GreenBox, Cultivate, and MTrac represent and warrant that they have the full right and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, and that neither the execution nor delivery of this Agreement by GreenBox or MTrac, nor consummation of the transactions contemplated hereby, will result in a breach or default under the terms and conditions of any contract, order, license, charter document or other agreement by which GreenBox or MTrac is bound.

 

	
			3.5

				
			Warranty of Organization and Licensing

			

 

GreenBox represents and warrants that it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.

 

Cultivate represents and warrants that is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.

 

Page 6 of 15

 

 

MTrac represents and warrants that is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted

 

	
			3.6

				
			Reliance on Information.

			

 

GreenBox and Cultivate shall be entitled to rely upon merchant data and information provided by MTrac. In no event shall GreenBox or Cultivate be liable with respect to any loss, claim, liability, cost, damage or expense arising out of a claim by MTrac or by third parties in connection with data, merchant information, computations, sales or registration information, and or services as to which such claim arises were provided and/or performed in accordance with MTrac's written requirements, separate or special agreement agreements with merchants that deviate from the standard terms provided, mis- entered data by MTrac employees, clients, affiliates , or agents.

 

MTrac shall be entitled to rely upon representations, compliance provisions, licensing, financial, and banking resources provided by GreenBox and Cultivate .

 

ARTICLE 4: LICENSE FEE, PROCESSING TARGETS, AND REVENUE

 

	
			4.1

				
			License Fee.

			

 

MTRAC in their original agreement, agreed to pay to GreenBox an annual licensing fee of Three Hundred and Sixty Thousand Dollars ($360,000.00). In recognition of the introduction of Ken Haller to GreenBox, future licensing fees shall be waived.

 

	
			4.2

				
			Processing Minimums.

			

 

As a condition to the exclusivity of MTrac's license, MTrac must meet certain merchant payment processing targets beginning in June 1, 2019 . The revenue targets for the first year shall be:

 

June 1, 2019 - Fifteen Million Dollars ($15,000,000.00) in monthly processing volume by MTrac referred merchants.

 

January 1, 2020 - Twenty-Five Million Dollars ($25,000,000 .00) in Monthly Processing Volume by Mtrac referred merchants.

 

June 1, 2020 - 40 Million Dollars ($40,000,000) in Monthly Processing Volume by Mtrac referred merchants.

 

After June 1, 2020 MTrac shall maintain revenue/processing at the June 1, 2020 processing volume . Failure to maintain the process volume shall be grounds for termination of the agreement pursuant to Article 6 based on a 3 month average. GreenBox will promptly notify MTrac of any month where the performance metric was not met. However , any final calculation for the purposes of cancellation shall be based on a calculation of the three (3) month average.

 

MTrac shall be excused for the failure to meet processing minimums, if Mtrac's failure to meet the processing minimum results solely from a demonstratable software failure or performance defect in the Software provided by GreenBox or Cultivate. In the event of such a failure or defect, the processing minimums shall be waived only for the time period that the defect or failure is active.

 

Page 7 of 15

 

 

	
			4.3

				
			Distribution of Revenue

			

 

Any revenue derived from the processing of the payments from Merchants referred under this agreement shall first be used to pay the buy rates set forth in section 4.2.1. The buy rates may be revised by GreenBox from time to time at its sole discretion. GreenBox shall provide Mtrac and Cultivate with updated buy rates within ten (10) days of any change based on Bank rate increases at which time GreenBox will provide proof of said increase.

 

After payment of the buy rates, any remaining funds shall be distributed as follows:

 

50% to MTrac

 

25% To GreenBox

 

25% To Cultivate Technologies

 

MTrac will be solely responsible for paying any Agent/ISO/ Affiliate/Referral fees out of MTrac's percentage.

 

MTrac is entitled to receive revenue distribution on any retail/face to face cannabis -relate d business, retail/face to face CBD stores that use Cultivate software on site, and other high-risk retail stores that use Cultivate software on-site referred to GreenBox and Cultivate by MTrac based on the above rate splits for the life of the account. As long as a merchant is transacting in the GreenBox and Cultivate system.

 

Any revenues generated from Business to Business (“B2B”) wallet to wallet transfers from retail/face to face cannabis-related business, retail/face to face CBD stores that use Cultivate software on site, and other high-risk retail stores that use Cultivate software on-site referred by MTrac to GreenBox and Cultivate will be split according to this section 4.3.

 

	
			4.2.1

				
			Buy Rates

			

 

The Buy rates as of the date of this agreement are as follows:

 

1.5% + $2.00 per transaction for all debit and credit card transactions

 

ARTICLE 5: CONFIDENTIALITY

 

	
			5.1.

				
			Definitions

			

 

“Confidential Information” includes written machine-reproducible and visual materials; all verbal disclosures made by or on behalf of the Parties under this Agreement; the terms of this Agreement; any software, whether in object, source or executable code; documentation and nonpublic financial information; information relating to the Parties' methods of operations; names, addresses, telephone numbers and other identifying information relating to clients; compilations and lists of clients; personnel data relating to any of the Parties' employees and contractors ; information contained in placement lists, job orders, applications, files, inter-office referral documents and other documents prepared by or for the Parties and their employees, at the Parties' expense or on the Parties' time or otherwise in furtherance of the Parties' business; nonpublic plans for new products and services,

 

Page 8 of 15

 

 

improvements and marketing strategies; and business contacts, pricing, business plans, techniques, methods and processes.

 

“Trade Secret” shall have the meaning as defined under California Civil Code Section 3426.1.

 

	
			5.2.

				
			Non-Disclosure

			

 

The Parties agree to receive and maintain the Confidential Information and Trade Secrets of the Parties as a confidential disclosure and shall not disclose such Confidential Information and Trade Secrets or any part thereofto any other person or entity, or use or permit any use of such Confidential Information and Trade Secrets or any part thereof or attempt to sell, assign, convey, lease, sub-license, commercially exploit, and/or otherwise market or use, in any way or manner, except as herein expressly permitted, except as follows: (i) with the Parties' prior written consent in each instance of disclosure or (ii) if any Party is required by law to disclose the Parties' Confidential Information or Trade Secrets, but only after prompt notice to the applicable Party, such that it has a reasonable opportunity to oppose or prevent a disclosure, and only to the extent so required. The foregoing nondisclosure obligations shall not apply to Confidential Information or Trade Secrets (a) which is or becomes publicly available other than through the breach of this Agreement, (b) which was known to the recipient prior to the disclosure by the other Party, (c) which a Party rightfully receives from a third party not bound by any confidentiality agreement with respect thereto, (d) which is independently developed by the recipient, or (e) which is required to be disclosed pursuant to legal or governmental requirements; provided, that disclosure under this clause (e) shall be limited to persons legally entitled to receive the information.

 

	
			5.3.

				
			Effect of Termination

			

 

In the event this Agreement expires or is terminated for any reason or should any Party request another Party to do so for any reason, such Party will promptly return, erase, or destroy all Confidential Information and Trade Secrets in its possession or control, including Confidential Information and Trade Secrets stored in any computer memory or data storage apparatus, and, at the Parties' request, provide an affidavit that such Party retains no Confidential Information or Trade Secrets in any form whatsoever.

 

	
			5.4.

				
			Irreparable Harm

			

 

The Parties hereto acknowledge that the Services to be rendered by the Parties and their confidentiality obligations hereunder are of a special, unique, unusual, and extraordinary character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated by damages in any action at law, and the breach by the Parties of any of the confidentiality provisions of this Agreement will cause the Parties irreparable injury and damage. The Parties expressly agree that the Parties shall be entitled to injunctive and other equitable relief in the event of, or to prevent, a breach of any provision of this Agreement by the Parties. Resort to such equitable relief, however, shall not be construed to be a waiver of any other rights or remedies that the Parties may have for damages or otherwise. The various rights and remedies of the Parties under this Agreement or otherwise shall be construed to be cumulative, and no one of them shall be exclusive of any other or of any right or remedy allowed by law.

 

ARTICLE 6: TERM AND TERMINATION

 

	
			6.1

				
			Term of Agreement.

			

 

Page 9 of 15

 

 

This Agreement shall commence upon December 17, 2018 and remain in effect until December 17, 2023 unless terminated sooner pursuant hereto. After this initial term, the contract will automatically renew for successive one-year terms unless notification is provided by either party that the contract will not be renewed. Such notification should occur at least 90 days prior to the expiration of the contract .

 

	
			6.2

				
			Termination of Agreement.

			

 

This Agreement may be terminated by any party if:

 

	 	
			A)

				
			A party becomes insolvent, is dissolved or liquidated, makes a general assignment of the benefits of its creditors, files or has filed against it a petition in bankruptcy, fails to pay any of its state or federal taxes, or has a receiver appointed for a substantial part of its assets.

			

	 	
			B)

				
			A party has committed a material breach and such breach has not been cured within thirty (30) days of receipt of a written notice of such breach.

			

	 	
			C)

				
			Any change in law or regulation that would: (i) make this Agreement or material portion of a party's performance under this Agreement illegal, or (ii) require that any material terms of this Agreement be extended to any nonparty.

			

	 	
			D)

				
			This agreement shall be terminated if a party breaches its obligations under Article 2.

			

 

	
			6.3

				
			Obligations upon Termination for Cause.

			

 

Upon termination:

 

	 	
			A)

				
			MTrac shall immediately discontinue use of GreenBox and Cultivate services and system applicati ons.

			

	 	
			B)

				
			MTrac shall pay GreenBox and Cultivate any amounts due for equipment under this Agreement up to and including the date of termination.

			

	 	
			C)

				
			MTrac shall immediately return all GreenBox and Cultivate software and delete any GreenBox and Cultivate software hosted by MTrac. MTrac shall provide GreenBox and Cultivate with all necessary documentation of this deletion.

			

	 	
			D)

				
			Parties shall continue to adhere to the confidentiality obligations of Article 5.

			

	 	
			E)

				
			GreenBox and Cultivate will be responsible for furnishing payment to MTrac pursuant to Article 4.

			

	 	
			F)

				
			GreenBox and Cultivate will be responsible for continuing to pay any referral fee/transaction split as referenced in 4.2 for existing merchants on the system to MTrac for the life of the acco unts.

			

	 	
			G)

				
			GreenBox and Cultivate will be responsible for maintaining the MTrac wallet for deposit of any transactional royalty owed for any merchant that was referred to GreenBox or Cultivate by MTrac.

			

	 	
			H)

				
			GreenBox and Cultivate will be responsible for maintaining the wallets of any ISO/Agents/Affiliates or Referrers for deposit of any transactional royalty owed for any merchant that are referred to GreenBox or Cultivate by MTrac.

			

 

	
			6.4

				
			Change-in-Control/ Data

			

 

Pursuant to Article 5 of this Agreement, both parties shall treat all data and other proprietary information as confidential at all times including during any due diligence or other activities that may

 

Page 10 of 15

 

 

occur as a part of a contemplated sale, merger, joint venture, strategic partnership or similar event with regards to ownership and operations of their respective companies .

 

Any data collected through joint partnership is considered shared data and no resale is permitted without consent from all parties, GreenBox, Cultivate, and MTrac. In the event of any significant change in ownership of GreenBox, no consent shall be required if the data is sold to an acquiring entity as a part of an acquisition or sale.

 

	
			6.5

				
			Data Security

			

 

Each Party shall comply with its obligations under all applicable data protection laws in respect of the Services to be provided under this Agreement.

 

 

ARTICLE 7: MISCELLANEOUS

 

	
			7.1

				
			Entire Agreement

			

 

This Agreement contains the entire agreement and understanding of the parties and shall supersede any and all prior agreements and understandings of the parties with respect to the subject matter hereof.

 

	
			7.2

				
			Compliance with Laws and Severability

			

 

In the performance of its duties and obligations under this Agreement, GreenBox, Cultivate, and MTrac shall each at all times comply with all applicable national, federal, state and local laws, statutes, regulations, rules, orders and ordinances now in effect or as hereafter enacted, amended or promulgated. If any clause or provision of this Agreement is held to be invalid or unenforceable by any court of competent jurisdiction, the remainder of this Agreement shall not be affected thereby. All other clauses or provisions of this Agreement, not found invalid or unenforceable shall be and remain valid and enforceable.

 

	
			7.3

				
			Mutual Indemnity

			

 

Each Party will indemnify, defend and hold the other Parties and their assignees, agents, officers and employees harmless from and against any claims, suits, proceedings, costs, liabilities, expenses (including court costs and reasonable legal fees), or damages (Claims) to real or tangible personal property and/or bodily injury to persons, including death, resulting from its or its employees, clients, affiliates, or agents negligence or a or omission arising from or related to this Agreement.

 

	
			7.4

				
			Enjoinment

			

 

If MTrac is enjoined (either temporarily or permanently) from using the Software in the manner described herein, GreenBox shall, at its option, either (1) replace the application, without additional charge, with a comparable, functionally equivalent and non-infringing product; (2) modify the Software to avoid the infringement; or (3) obtain a license for MTrac to continue to use the Software for the duration of the term and pay for any additional fee required for such license.

 

	
			7.5

				
			Amendments and Captions

			

 

Page 11 of 15

 

 

The terms of this Agreement may only be modified or amended in writing signed by duly authorized representatives of both parties. The captions of this Agreement are for convenience and reference only and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof.

 

	
			7.6

				
			Notices

			

 

Any notice to be given by either party to the other shall be in writing and shall be given by sending such notice postage prepaid by certified mail or by overnight carrier and addressed to the other party at the location specified below:

 

If to Cultivate:

 

Cultivate Technologies, LLC

3333 East End Ave,

South Chicago Heights, IL, 60411

 

If to GreenBox:

 

GreenBox POS, LLC

8880 Rio San Diego Drive

Suite 102

San Diego, CA 92106

 

If to Mtrac:

 

1835 Sunset Cliffs Blvd

Suite 202

San Diego Ca 92107

 

	
			7.8

				
			Arbitration

			

 

Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in San Diego, CA before one arbitrator. The arbitration shall be administered by JAMS pursuant to JAMS' Streamlined Arbitration Rules and Procedures. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.

 

	
			7.9

				
			Attorney's Fees

			

 

If any party hereto commences an action to enforce the terms of, or resolve a dispute concerning this Agreement, the prevailing party in such action shall be entitled to recover from the other party all costs and expenses incurred by such party in connection therewith, including reasonable attorney's fees.

 

	
			7.10

				
			Assignments

			

 

Page 12 of 15

 

 

GreenBox, Cultivate, and MTrac shall not assign this Agreement to a third party without prior written consent of the other party except that GreenBox shall have the right to transfer its license to the Software to a new entity that results from a merger and/or acquisition of GreenBox provided that the new entity agrees to abide by the terms of this agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective assigns as permitted under this Agreement.

 

	
			7.12

				
			Force Majeure

			

 

None of the parties shall be considered in default of its obligations hereunder, or be liable for damages or otherwise, for failure or delay in performance which is due to, including but not limited to the following: (i) Acts of God (ii) regulations or laws of any government (iii) war or civil commotion (iv) destruction of facilities (v) fire, earthquake or storm (vi) labor disturbances (vii) failure of public utilities or common carrier.

 

	
			7.11

				
			No Waiver of Rights

			

 

No waiver by Cultivate, GreenBox, or MTrac with respect to any breach or default or of any right or remedy and no course of dealing shall be deemed to constitute a continuing waiver of any other breach or default or of any other right or remedy, unless such a waiver be expressed in writing by the party to be bound.

 

	
			7.12

				
			Governing Law

			

 

The provisions of this Agreement and all questions with respect to the construction and enforcement thereof and the rights and liabilities of the parties hereto shall be governed by, and construed and enforced in accordance with, the laws of the State of California. The venue of any action construing or enforcing this Agreement initiated by any party hereto shall be filed in the state or federal courts servicing California located in San Diego County.

 

The parties to this Agreement, by their signatures below, agree to the terms set forth herein.

 

 

 

[A Signature Page Follows]

 

Page 13 of 15

 

 

 

 

	Cultivate Technologies, LLC 	 	
			GreenBox POS

			
	 	 	 
	By:       /s/ Ken                                                                    	 	By:       /s/ Fredi Nisan                                                        
	 	 	 
	
			Name:  Ken                                                                         

				
			 

				
			Name:  Fredi Nisan                                                             

			
	 	 	
			 

			
	Title:    Partner                                                                     	
			 

				
			Title:    CEO                                                                        

			
	 	 	 
	Date:      12/17/2018                                                            	 	Date:      12/17/2018                                                            
	 	 	 
	 	 	 
	Mtrac	 	 
	
			 

				
			 

				
			 

			
	By:       /s/ Vanessa                                                               	 	 
	 	 	 
	Name:  Vanessa                                                                    	 	 
	 	 	 
	Title:    CEO                                                                        	 	
			 

			
	 	
			 

				
			 

			
	Date:      12/17/2018                                                            	 	 

 

 

Page 14 of 15

 

 

 

EXHIBIT A.

 

MTrac ISO agreement attached hereto - will provide.

 

 

 

 

Page 15 of 15

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