Item
1.01 Entry into a Material Definitive Agreement.
On
February 27, 2023, Indoor Harvest Corp. (“Indoor Harvest”) and Electrum Partners, LLC, a Nevada limited liability company
(“Electrum”), entered into an asset purchase agreement (the “Purchase Agreement”) whereby Indoor Harvest agreed
to acquire certain assets and certain liabilities of Electrum, a company in the business of venture development. There exists a material
relationship between Indoor Harvest and Electrum in that Indoor Harvest’s chief executive officer and chairman, Leslie Bocskor,
is also the managing member of Electrum.
Pursuant
to the Purchase Agreement, Indoor Harvest will acquire, among other assets and liabilities: all of Electrum’s intellectual property
including its name, logos, website, similar URLs and related brand materials; Electrum’s business, industry and political network,
and social media presence; and certain trade accounts and scheduled liabilities.
In
addition, Electrum agreed to certain commitments, including: (a) commitment of Electrum’s managing member, Mr. Bocskor, to negotiate
to be engaged by Indoor Harvest to devote his primary professional efforts and time to Indoor Harvest for a commercially reasonable period
of time, which engagement will include commercially reasonable non-competition provisions; (b) commitment to negotiate, commercially
reasonable engagement agreements with key members of Electrum’s current operational team for the benefit of Indoor Harvest, which
current operational team includes independent contractors, associates, and advisors; (c) commitment to conduct any future transactions
with all of Electrum’s business relationships for Indoor Harvest’s benefit, with the exception of those related to the Excluded
Assets (as defined in the Purchase Agreement); and (d) Electrum’s commitment to cease to pursue new business for its benefit, excluding
those related to the Excluded Assets.
As
provided for in the Purchase Agreement, the purchase price paid at closing will consist of: (a) $4,000,000 in a combination of cash and
in the form of a promissory note as determined by Indoor Harvest and Electrum prior to closing; (b) 600,000,000 shares of restricted
common stock of Indoor Harvest; and (c) a warrant to purchase 600,000,000 shares of common stock of Indoor Harvest, with an exercise
price of $0.01 per share, a five-year term, piggy back registration rights, and a cashless exercise provision (the “Purchase Price”),
plus the assumption of certain liabilities.
Further
to the transaction, Indoor Harvest and Electrum agreed to establish an escrow account in accordance with the terms and conditions set
out in an escrow agreement, which will escrow funds for the purpose of securing the indemnification obligations of Electrum as provided
in the Purchase Agreement.
The
Purchase Agreement contains customary representations and warranties, as well as closing conditions, which include the release of any
encumbrances, such as security interests, relating to the Purchased Assets (as defined in the Purchase Agreement); and receipt of any
approvals, consents and waivers that are identified in the Purchase Agreement’s disclosure schedules. In addition, the closing
is subject to Indoor Harvest completing a capital raise of $5,000,000, and the settlement and release, or other reasonable accommodations,
of Electrum’s Disclosed and/or Threatened Litigation (as defined in the Purchase Agreement).
The
Purchase Agreement may be terminated at any time prior to closing by (a) mutual written consent of the parties; (b) by either party,
(i) in the case of breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the other
party that would give rise to the failure of any of the closing conditions and has not been cured within 10 days of written notice thereof;
(ii) if it becomes apparent that any of such conditions will not be, fulfilled by six months from signing, unless such failure shall
be due to the failure of either party to perform or comply with any of the covenants, agreements or conditions hereof to be performed
or complied with by it prior to the closing; or (iii) if any law that makes consummation of the transactions contemplated by the Purchase
Agreement illegal or otherwise prohibited or (ii) any governmental authority shall have issued a governmental order restraining or enjoining
the transactions contemplated by this Agreement, and such governmental order shall have become final and non-appealable.
Further,
Indoor Harvest and Electrum agree that the Purchase Agreement, including any and all schedules and exhibits, shall be subject to completion
and final mutual written acceptable modification and or amendment prior to its closing, and that in the event any party seeks to reject
any such item and or not to “close”, then in satisfaction of the termination of the Purchase Agreement, the party seeking
to withdraw shall pay to the other $500,000 as a fixed liquidated fee, not a penalty.
The
foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of such document which is
filed hereto as Exhibit 2.1, and which is incorporated herein by reference.