VFRM Veritas Farms Inc (QB)

On July 22, 2021, Veritas Farms, Inc. (the “Company”) issued secured convertible promissory notes in the aggregate principal amount of $1,075,000 (the “Secured Convertible Promissory Notes”) in exchange for an aggregate amount of $1,075,000, which Secured Convertible Promissory Notes were issued to the Cornelis F. Wit Revocable Living Trust (the “Wit Trust”), a principal shareholder who holds securities of the Company that constitute a majority of the voting securities of the Company, in the amount of $1,000,000, Stephen E. Johnson, Chief Executive Officer and President of the Company, in the amount of $50,000, and Ramon A. Pino, Executive Vice President of Finance of the Company, in the amount of $25,000. The Secured Convertible Promissory Notes are secured by the Company’s assets and contain certain covenants and customary events of default, the occurrence of which could result in an acceleration of the Secured Convertible Promissory Notes. The Secured Convertible Promissory Notes are convertible as follows: prior to the Company closing a financing through the sale and issuance of the Company’s equity securities, debt, convertible debt, a combination of the foregoing or otherwise (“Conversion Securities”), on or prior to the due date of the Secured Convertible Promissory Note (the “Financing”), the Holder has the right, in its sole discretion, to convert in whole or in part the principal and accrued but unpaid interest thereon through and as of the date of the closing of the Financing, into the identical Conversion Securities issued at such Financing. The Notes will accrue interest at 8% per annum, which is payable upon payment or conversion of the Secured Convertible Promissory Notes into the Financing, at the option of the Holder. All unpaid principal, together with any then unpaid and accrued interest and other amounts payable under the Secured Convertible Promissory Notes, is due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Notes on the earlier of (i) April 01, 2022, or October 1,2021 (ii) following an event of default. In addition, the Secured Convertible Promissory Note issued to the Wit Trust provides that $500,000 of principal will be due and payable if not converted pursuant to the terms and conditions of the Secured Convertible Promissory Note at such time as the Company raises a minimum amount of $1,000,000 in additional capital.

The foregoing description of the terms of the Secured Convertible Promissory Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Form of Secured Convertible Promissory Note attached hereto as Exhibit 10.1.