INDOOR HARVEST CORP. (OTCMKTS:INQD) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Contractual Joint Venture
Agreement
On March 23, 2017, Indoor Harvest Corp. (IHI) entered into a
Contractual Joint Venture Agreement (the Agreement) by and
between Vyripharm Enterprises, LLC (Vyripharm) and Alamo CBD, LLC
(Alamo CBD), collectively the Parties, to which the parties
agreed to participate in an unincorporated joint venture (the
Joint Venture) for the following business purposes:
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The parties will work together to enhance the ability of Alamo CBD to apply for and obtain licensure, or a permit, to grow and/or dispense marijuana products for medical and/or consumer use, as the case may be: |
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i. In Texas, to the Texas Compassionate Use Act, as may be
ii. In Colorado, to recent Colorado legislation permitting
iii. to recent United States Drug Enforcement |
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To establish Alamo CBD as a supplier of a variety of medical use cannabis oil to Vyripharm for Vyripharms use in conducting research and development to create novel pharmaceutical and radiopharmaceutical compounds designed to image and treat certain debilitating diseases including, but not limited to epilepsy, post-traumatic stress disorder, Alzheimers, ALS, and other neurodegenerative diseases; and to establish IHI as the project developer and engineering, procurement and construction group, in which IHI is responsible for costs and efforts related to Alamo CBD’s efforts to become licensed under the Texas Compassionate Use Act and to meet its obligations under this Joint Venture agreement. |
The initial term of the Joint Venture shall be five (5) years
following the Effective Date, and the Agreement may be extended
beyond the Initial Term by mutual consent of the Parties.
Costs of Operation of the Joint Venture
to the Agreement, IHI has agreed to contribute a total of
$5,000,000 on the basis of $1,000,000 per year for each of the
first five (5) years of the Initial Term. The first payment of
$1,000,000 shall be paid to Vyripharm no later than four (4) days
following the Effective Date, and the remaining four (4) annual
payments shall be paid by IHI to Vyripharm on each of the
following one (1) year anniversaries of the Effective Date. If
IHI should fail to timely pay the initial $1,000,000 as set forth
above, this Agreement shall terminate and neither Party shall
have further obligation to the other. If IHI should fail to pay
the second $1,000,000 payment within thirty (30) days following
the second anniversary of the Effective Date, then this Agreement
shall terminate and Alamo CBD shall forfeit four-fifths (4/5) of
its revenue share as set forth in Paragraph 7 from any product
that has been developed or is subsequently developed by Vyripharm
which uses cannabis oil or processes supplied to Vyripharm by
IHI. If IHI should fail to pay the third $1,000,000 payment
within thirty (30) days following the third anniversary of the
Effective Date, then this Agreement shall terminate and IHI shall
forfeit three-fifths (3/5) of its revenue share as set forth in
Paragraph 7 from any product that has been developed or is
subsequently developed by Vyripharm which uses medical cannabis
oil or processes supplied to Vyripharm by IHI. If IHI should fail
to pay the fourth $1,000,000 payment within thirty (30) days
following the fourth anniversary of the Effective Date, then this
Agreement shall terminate and IHI shall forfeit four-fifths (2/5)
of its revenue share as set forth in Paragraph 7 from any product
that has been developed or is subsequently developed by Vyripharm
which uses medical cannabis oil or processes supplied to
Vyripharm by IHI. If IHI should fail to pay the fifth $1,000,000
payment within thirty (30) days following the fifth anniversary
of the Effective Date, then this Agreement shall terminate and
IHI shall forfeit one-fifth (1/5) of its revenue share as set
forth in Paragraph 7 from any product that has been developed or
is subsequently developed by Vyripharm which uses medical
cannabis oil or processes supplied to Vyripharm by IHI. With the
exception of cost sharing for the filing of, prosecuting and
maintaining any joint patent applications to Paragraph 6 of this
Agreement, and unless the Parties mutually agree, IHI shall have
no further financial obligations under this Agreement during the
Initial Term. The Parties shall otherwise bear their own costs in
carrying out their respective responsibilities under this
Agreement.
Note1: Due to the Fees and schedule that Vyripharm must attained
with the institutions in the TMC the only pay out structure that
we can approve is the following: The first $1,000,000 shall be
paid as follow: Option 1) Upfront all the $1,000,000.00 for the
year if excess funds are raised (Over the $10,250,000), Option 2)
5% of funds up to $10,250,000, which are raised from
presentations to investors in which Vyripharm participates;
Option 3) if less than $10,250,000 is raised in 2017, then IHI
will/should make a $250,000 down payment to Vyripharm, and pay
another $250,000 at the end of the 2nd quarter of 2017. If IHI
does not have the funds to pay another $250,000 in the 3rd
quarter of 2017, then that payment can be pushed back to the 4th
quarter with the final payment of $500,000 owed to Vyripharm in
or at the end of the 4th quarter of 2017.
Intellectual Property
to the Agreement, Vyripharm has agreed that any patent
application that is originated by Vyripharm that specifically
uses Alamo CBDs cannabis oil, or IHI’s aeroponic process, as
licensed to Alamo CBD, as part of the invention shall list Alamo
CBD and IHI as additional inventors. The parties have further
agreed that the cost to prepare and file, prosecute and maintain
any such patent application, shall be shared between Vyripharm
and Alamo CBD 85%/15% unless the combination between Alamo CBD
and IHI is not consummated, at which time Vyripharm, Alamo CBD
and IHI will shares costs 85%/7.5%/7.5% respectively. Should any
party fail to pay its obligation for costs of any patent
application when due and is not able to work out an arrangement
with Vyripharm concerning such failure to pay the invoice, such
party shall forfeit its ownership interest in such patent or
pending patent application and forthwith execute an assignment of
its interest in such patent or patent application to Vyripharm.
Responsibility for Management, Costs and Revenues of the Joint
Venture
The Parties have agreed that Vyripharm shall hire an independent
contractor, an account management firm, to manage The Joint
Venture Project, and that the costs of such firm will shares on
an 85%/15% basis.
All revenue from the licensure or the sale of any product
developed by Vyripharm which utilizes medical cannabis oil and
processes supplied by Alamo CBD and IHI under the Agreement shall
be shared between Vyripharm and Alamo CBD 85%/15%, respectively,
unless the proposed combination between Alamo CBD and IHI is not
consummated, in which case all such revenue shall be shared
between the parties on and 85%/7.5%/7.5% basis. Any revenues
received by Vyripharm under the Agreement shall be distruibuted
to Alamo CBD and IHI on a calendar quarter basis, with each
distribution being made by Vyripharm to Alamo CBD and IHI within
fifteen (15) days following the last day of each calendar
quarter.
Vyripharm shall appoint two (2) members to the Management
Committee and Alamo shall appoint one (1) member to the
Management Committee. For Vyripharm, Jerry Bryant shall be the
Chairman of the Management Committee unless Mr. Bryant should
elect to appoint the second Vyripharm member as the Chairman. The
Management Committee shall meet in person two (2) times each year
and telephonically two (2) times each year. Meetings shall take
place quarterly and in-person meeting shall occur every other
meeting. If Alamo CBD wishes to add items to the meeting agenda,
then Alamo CBD shall submit such changes to Vyripharm within one
(1) week of receiving Vyripharms proposed agenda. The purpose of
each meeting shall be to summarize activities during the previous
quarter regarding the Joint Venture and address projected work
for the next quarter. The Parties shall endeavor, in good faith,
to reach consensus regarding work planned for the following
quarter in deference to achieving the goals of the Joint Venture.
If agreement cannot be reached, then the decision of the Chairman
shall be conclusive regarding the matter requiring decision.
Exclusivity
During the term of the Joint Venture, the Parties have agreed to
work exclusively with one another with respect to any purpose
related, directly or in directly, to the purpose of the Joint
Venture.
8% Fixed Convertible Promissory
Note
On March 24, 2017 (the Effective Date), Indoor Harvest Corp (the
Company) issued and sold an 8% Fixed Convertible Promissory Note
(the Note) to Tangiers Global, LLC, a Wyoming limited liability
Company (the Buyer), in the aggregate principal amount of up to
$550,000, with an initial consideration of $275,000 in aggregate
principal amount including $250,000 actual payment of purchase
price (the Purchase Price) plus a 10% original issue discount
(the Principal Amount)
Convertible Note
On the Closing Date, the Company issued a Note in the aggregate
$550,000 in face value, which will, by the principal terms:
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Bears guaranteed interest at 8% (the Interest) on the |
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Mature on November 28, 2017 and may be prepaid in whole or |
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Convert into shares of Common Stock at a price equal to |
Events of Default
Subject to applicable cure periods and delivery of written notice
to the Company if applicable, the Notes shall become immediately
due and payable upon occurrence of an Event of Default (as
defined in the Note) and the conversion price shall be adjusted
as set forth in the Notes if applicable.
Use of Proceeds
The Company agreed to use the proceeds under the Note as payment
to Vyripharm to a Joint Venture and to provide bridge capital
towards a larger capital raise pending a combination with Alamo
CBD, LLC and the awarding of a provisional license under the
Texas Compassionate Use Program and not for the repayment of any
indebtedness owed to officers, directors or employees of the
Company or their affiliates or in violation or contravention of
any applicable law, rule or regulation.
The foregoing description of the Note is only a summary of the
material terms and does not purport to be complete and is
qualified in its entirety by reference to such document. A copy
of the Note is filed as Exhibit 10.2 to this current report on
Form 8-K.
Important Notice regarding the
Notes
The Notes have been included as exhibits to this Current
Report on Form 8-K to provide investors and security holders with
information regarding their terms. They are not intended to
provide any other financial information about the Company. The
representations, warranties and covenants contained in the Notes
were made only for purposes of those agreements and as of
specific dates; were solely for the benefit of the parties to the
Notes; may be subject to limitations agreed upon by the parties,
including being qualified by disclosures made for the purposes of
allocating contractual risk between the parties to the Notes
instead of establishing these matters as facts; and may be
subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors. Investors
should not rely on the representations, warranties and covenants
or any description thereof as characterizations of the actual
state of facts or condition of the Company. Moreover, information
concerning the subject matter of the representations, warranties
and covenants may change after the date of the Notes, which
subsequent information may or may not be fully reflected in
public disclosures by the Company.
Item 2.03 Creation of a Direct Financial Obligation or
and Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth under Item 1.01 above is incorporated
by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity
Securities
The information set forth under Item 1.01 above is incorporated
by reference into this Item 3.02.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
Exhibits
| 10.1 |
Joint Venture Agreement between Indoor Harvest, Alamo CBD and Vyripharm |
| 10.2 | Tangiers 8% Fixed Convertible Promissory Note |
About INDOOR HARVEST CORP. (OTCMKTS:INQD)
Indoor Harvest Corp. is a design-build contractor for the vertical farming and indoor farming industry. The Company’s principal lines of business are engineering, procurement and construction services, as well as manufactures a range of indoor farming fixtures and equipment. It provides production platforms, mechanical systems and complete custom designed build outs for both Controlled Environment Agriculture (CEA) and Building Integrated Agriculture (BIA). Its technologies include greenhouse production, hydroponics, aquaculture, aquaponics and aeroponics. It offers a vertical farm racking system with integrated light emitting diode (LED) lighting. Its vertical farm racking system is used for both aeroponic and hydroponic layered crop production within a CEA or BIA operation. It offers services under the Indoor Harvest brand. Its products include Indoor Harvest Modular HP-Aeroponics Platform, Indoor Harvest Shallow Raft VFRack Platform and Indoor Harvest Low Tide VFRack Platform. INDOOR HARVEST CORP. (OTCMKTS:INQD) Recent Trading Information
INDOOR HARVEST CORP. (OTCMKTS:INQD) closed its last trading session up +0.020 at 0.420 with shares trading hands.
