CONVERTIBLE NOTE AGREEMENT FOR PRECICION TRIM, INC.

Transcription

1 CONVERTIBLE NOTE AGREEMENT FOR PRECICION TRIM, INC. THIS IS A SPECULATIVE INVESTMENT AND MAY INVOLVE SOME RISK. BEFORE INVESTING, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER AMONG OTHER THINGS THE RISKS WITH AN INVESTMENT OF THIS TYPE. THESE NOTE AGREEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS TERM SHEET. ANY REPRESENTATION CONTRARY TO THE FOREGOING IS UNLAWFUL. THIS STATEMENT REQUIRED BY LAW. DELIVERY OF THIS INVESTOR TERM SHEET SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY INTEREST IN PRECISION TRIM INC. (THE COMPANY"). THIS DOCUMENT IS INTENDED TO PRESENT A GENERAL SUMMARY OF THE INVESTMENT STRATEGY OF THE COMPANY AND THE TERMS OF AN INVESTMENT THEREIN AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPERATING AGREEMENT OF THE COMPANY, THE TERMS OF AN INVESTMENT THEREIN AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE CONVERTIBLE NOTE OF THE COMPANY, WHICH SPECIFIES THE RIGHTS AND OBLIGATIONS RELATING TO INVESTMENT IN THE COMPANY AND SHOULD BE REVIEWED. IN NO EVENT SHALL AN OFFER BE MADE IN ANY JURISDICTION IN WHICH SUCH SOLICITATION IS UNLAWFUL. ANY REPRESENTATIONS TO THE CONTRARY ARE UNLAWFUL. The Company Precicion Trim, Inc ("PRTR") intends to increase the efficiency of the marijuana trimming industry by introducing automated plant trimming machines, (patent pending, application number ) along with post processing equipment that will convert the waste trim into usable oils and other derivatives, leaving virtually no waste. The industry is currently over $1.6 billion in size, with the cost of harvesting at 10% -30% to growers; thus they are spending approximately $320M each year on trimming. The goal of Precision Trim is to capture 10% of this market in the first year following the completion of the PIPE offering and generate over $32 M in revenue. The oil extraction process can help Precision Trim expand to over $100M in revenue annually. Terms of Offering The Company is offering up to $ 1,000, dollars of a 12% one year convertible note to accredited investors. The minimum note size shall be $25, The note sets forth, among other things, the rights and preferences including, but not limited to conversion, stated interest rate, maturity, distribution rights, and transfer of interests as well as other matters customarily included in a private convertible note. Additional Information & Subscription Instructions If you have any questions regarding this investment, please contact Richie Kerwin Lim at (657) Instructions for subscribing to purchase interests in this Offering appear in the Note. The Convertible Note must be completed by each prospective investor, and received by the Company with clear funds before the Note is executed by the Company and filed. Limited Operating History The Company was organized in April 2016 as a C Corporation. Accordingly, the Company has a limited operating history upon which an evaluation of its prospects and future performance Page 1

2 can be made. Such prospects must be considered in light of the risks, expenses and difficulties frequently encountered in the operation and expansion of a new business in an industry characterized by intense competition. Accordingly, an investment in the Company is a speculative investment suitable only for persons having no need for immediate liquidity in their investment. Convertible Promissory Note Agreement This Agreement by and between Precicion Trim, Inc for profit Corporation duly organized and existing under the laws of the State of Nevada, Beach Blvd. 9th Floor, Huntington Beach, CA hereinafter called the Company, and_ who reside(s) at, hereinafter called the Note Holder. W I T N E S E T H: WHEREAS, Note Holder is desirous of lending Company the sum of $ certain terms and conditions; and upon WHEREAS, Company is desirous of accepting said funds upon certain terms and conditions contained in this Convertible Promissory Note, hereinafter called the Note. NOW, THEREFORE, In consideration of the mutual covenants and conditions contained herein, the parties hereby agree, represent and warrant as follows: 1. Terms of the Note A. Within ten (10) days of the receipt of funds from Note Holder, the Company shall issue and deliver a Convertible Promissory Note in the principal sum of $ to Note Holder. The Note shall be dated as set forth below and shall mature one year from said date. The Note will bear interest on the unpaid principal balance thereof at the rate of Twelve (12%) percent per annum. The Company will pay to Note Holder all accrued interest on any of the Note held by Note Holders without presentment of the Note. B. In the event that Note Holder shall sell or transfer any or the entire Note, they shall notify the Company in writing of the name and address of the transferee(s) within thirty (30) days of said transfer together with a copy of the document evidencing said transfer. C. In the event the Company defaults on any interest payment due hereunder, the Note Holder or any lawful successor in interest may, at his option, with thirty (30) days written notice to the Company at the address stated above, declare the entire principal and any interest accrued thereon immediately due and payable. D. On or about the maturity date of the Note, the Company will authorize and issue a Common Stock of the Company, hereinafter called Shares. The Note Holder shall have the right to convert the Note into Shares at a price which shall be equal to twice the value of any unpaid portion of the Note, or into the common equity of the Company upon the same terms and conditions. E. The value of each Share will be determined by the closing price at the maturity date. Page 2

3 2. Representations and Warranties of Company A. Company is a Corporation duly organized and existing in good standing under the laws of the State of Nevada and has the legal power to own its own property and to carry on the business as it is now being conducted. B. Company has on its records the names, addresses and social security numbers of any and all individuals who possess ownership interests in the Company. C. There is no action or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency, the determination of which might result in any material adverse change in the business of the Company. D. The Company has title to the respective properties and assets including technologies, existing and future contracts and licensing agreements. E. The Company is not a party to any contract or agreement or subject to any restriction which would materially and/or adversely affect its business, property or assets, or financial condition; neither the execution nor delivery of this Agreement, nor the confirmation of the transactions contemplated herein, nor the fulfillment of the terms hereof, nor the compliance with the terms and provisions hereof and of the Note will conflict with or result in the breach of the terms, conditions or provisions or constitute a default, under the Articles of Incorporation or Code of Regulations of the Company or of any Agreement or instrument to which the Company is now a party. F. The Company has not declared, set aside, paid or made any dividend or other distributions to its owners and has not made or caused to be made directly or indirectly, any payment or other distribution of any nature whatsoever except for regular salary payments for services rendered and the reimbursement of business expenses. G. All of the equipment of the Company is in good condition and repair. H. There are no outstanding options or rights to purchase interests of the Company and no outstanding securities with the right of conversion into ownership of the Company. I. The Company owns or possesses adequate licenses or other rights to use, all patents, trademarks, trade names, trade secrets, and copyrights used in its business. No one has asserted to the Company that its operations infringe on the patents, trademarks, trade secrets or other rights utilized in the operation of its business. J. Neither the Company nor any agent or employee acting in its behalf has offered the Note or any portion thereof for sale to, or solicited any offer to buy the same or any portion thereof from any person or persons other than the purchasers listed in this Note and neither the Company nor any agent or employee acting in its behalf will sell or offer for sale the Note or any portion thereof to, or solicit any offer to buy the Note from any person or persons so as to bring the issuance or sale thereof within the provisions of Section 5 of the Securities Act of Page 3

4 3. Representations and Warranties of Note Holder: A. The Note Holder is subscribing for the Note for his/her/their own account for investment purposes only and not with the view to resell Note in connection with any distribution thereof and have no present intention to sell, give or otherwise transfer the Note. B. The Note Holder states that he/she/they are legal residents of the State of _. C. The Note Holder understands that this is a highly speculative investment in a technically insolvent Company which will require additional funding to continue in business and implement its business plan. D. Note Holder represents and warrants that he/she/they has a net worth in excess of exclusive of residences and are sophisticated investors who are knowledgeable about the business and investing. E. Note Holder warrants and agrees that he/she/they will not be active in the business affairs of the Company. 4. Prepayment of the Notes The Company shall have the right to make the conversion of the Note under the terms contained in Section 1 of this Agreement at any time upon thirty (30) days written notice to Note Holder. Such a conversion shall be accompanied by a payment of all accrued interest through and including the date of conversion. 5. Conversion and Non-Dilution. A. At any time up to and including the maturity date of the Note, Note Holder may convert all or part of the Note into equity in the company pursuant to the terms of paragraph 1 of this Agreement by the surrender of the certificate representing the Note to the Company at its principal office in the Huntington Beach, California. B. Upon conversion of all or part of the Note, all accrued and unpaid interest on the principal amount converted shall be paid to the Note Holder by the Company. C. The Company shall take all necessary steps to register any equity interest received subject to the conversion privilege as described in this section and Section 1 of the Agreement. D. The Company is also raising money through a Private Placement memorandum (PPM) at $1.00 per share. The investor can convert into the PPM from the promissory note at anytime in the first 6 months following the funding of the note. E. In case the Company shall at any time divide its outstanding Ownership Interests into a greater number of such interests, the conversion price in effect immediately prior to such subdivision shall be proportionately reduced, and, conversely, in the case of outstanding Ownership Interests of the Company shall be combined into a smaller number of interests, the actual conversion price in effect immediately prior to such combination shall be proportionately increased. Page 4

5 F. In the event the Company shall declare a dividend or make a distribution of any kind to any class of Ownership Interests, the aggregate maximum number of shares of Ownership Interests issued in payment thereof shall be deemed to have been issued or sold without consideration. G. In the event the Company effects a consolidation or merger with any other corporation, or in the case of the sale and conveyance to another to another corporation or person of the property of the Company in its entirety or substantially as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that each Note Holder shall have the right to thereafter convert the Note into the kind and amount of shares of Stock and/or other securities and property receivable as that received by holders of Ownership Interests in proportion to Note Holder s ownership of the Company. 6. Covenants of Company A. So long as any Note is outstanding, PRTR will deliver to the Note Holder thereof: (i) as soon as practical, and in any event within ninety (90) days after the end of each fiscal year, a consolidated income and profit and loss statement of the Company, and (ii) with reasonable promptness, such other financial data as the Holders may request in writing. (iii) will permit any Note Holder to visit and inspect, at the Holder's expense, any of the property of the Company, and to discuss affairs, finances and accounts with its officers and members and employees. B. Without the written consent of each Note Holder, the Company will not: (i) create or enter into any agreement that will cause any mortgage, pledge, encumbrance, lien on any of its properties or assets, whether now owned or hereafter acquired, except for mortgages, encumbrances, liens or charges which are now in existence; (ii) create any mortgages, liens, charges and encumbrances (a) for taxes, assessments or governmental charges or levies on property of the Company if the same shall not be due or delinquent or thereafter can be paid without penalty, or being contested in good faith and by appropriate proceedings; (b) of mechanics and material men for sums not yet due or being contested in good faith and by appropriate proceedings; or (c) in connection with workers' compensation, unemployment insurance and other state employment legislation; (iii) make any loan or advance funds to any person, firm or corporation; (iv) assume, guarantee, endorse or otherwise become liable in connection with the obligations, stock or dividends of any person, firm or corporation except in the ordinary course of business by endorsement of a negotiable instrument in the course of collection; and (v) enter into any material transaction with an entity or business in which any owner of record of beneficially more than seventy five percent (75%) of the Company shall have, at the time, a beneficial interest, direct or indirect. Page 5

6 7.Default A. A breach of any of the events or conditions contained in Section 6 of this Agreement shall constitute an event of default under this Agreement. Any one or more of the Holders of the Notes may give written notice of such breach and if the Company shall, within thirty (30) days after receipt of such written notice, fail to correct such occurrence or condition, then any Note Holder may, at his/her/their option and without notice, declare the entire principal and interest accrued thereon immediately due and payable and may proceed with collection. B. If the Company has made a material misrepresentation in connection with this Agreement or with the transactions contemplated by this Agreement, or if the Company makes an assignment for the benefit of creditors, or a trustee or receiver is appointed for the Company; or if any proceeding involving the Company is commenced under any bankruptcy, reorganization, arrangement, insolvency, statute or law, such event shall be deemed a default which will immediately entitle each Note Holder, at his/her/their option and without notice, to declare the entire amount of interest accrued thereon immediately due and payable and proceed to enforce the collection thereof. C. In case of default in the payment of any interest called for hereunder, the Note Holder may, at his/her/their option and without notice, declare the entire principal and the interest accrued thereon immediately due and payable and may proceed to enforce the collection thereof. 8. Miscellaneous A. Any and all notices, approvals or other communications to be sent to the parties shall be deemed validly and properly given if made in writing and delivered by hand or by registered or certified mail, return receipt requested, and addressed to the Company at its address listed above or to any Note Holder at the address listed above. B. This Agreement may not be modified, amended or terminated except by written agreement executed by all the parties hereto. C. The waiver of any breach or default hereunder shall not be considered valid unless in writing and signed by the party giving such notice and no waiver shall be deemed a waiver of any subsequent breach or default of same. D. The paragraph and section headings contained herein are for the purpose of convenience only and are not intended to define or limit the contents of such. E. The validity, construction, interpretation and enforceability of this Agreement and the Notes executed pursuant to this Agreement shall be determined and governed by the laws of the State of California, County of Orange. F. This Agreement shall be binding upon and inure to the benefit of the company and its successors and assigns. G. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. Page 6

7 Funds are wired to: Checks are Mailed or FedEx to: Wells Fargo Bank Precicion Trim, Inc PO Box Beach Blvd Portland, OR th Floor ABA# Huntington Beach, CA Account # In care of Precicion Trim, Inc. FedEx Account # The undersigned have executed this Agreement (by their duly authorized officers, as applicable) as of the date written under their names below, to be effective as of the date of execution by both parties. Precicion Trim, Inc By: Richie Kerwin Lim President Note Holder: Name:_ Signature Signature Date Soc Sec #_ Date Address: Beach Blvd. 9th Floor Huntington Beach, CA PH: FAX: info@preciciontrim.com Address: PH:_ FAX: Page 7