Exhibit 10.3

 

 

SELLERS ACQUISITION NOTE

Principal Amount: $225,000.00

 

Issuance Date: February 12, 2020

 

FOR VALUE CONSIDERATION relative to the Acquisition Agreement

between MCTC Holdings, Inc. and Lelantos, Inc., a Wyoming Corporation, dated
February 12, 2020, MCTC HOLDINGS, INC., a Delaware corporation (the “Company”),
hereby promises to pay to the order New Horizons Laboratory Services, Inc., a
Wyoming Corporation or the holders assigned (the “Holder”) the amount set out
above as the Principal Amount when due, whether upon the Maturity Date (as
defined herein), any acceleration, redemption or otherwise (in each case in
accordance with the terms hereof) and to pay interest (“Interest”) on any
outstanding Principal at the applicable Interest Rate from the date set out
above as the Issuance Date (the “Issuance Date”) until the same becomes due and
payable, whether upon a Repayment Date, the Maturity Date or acceleration,
conversion, redemption or otherwise (in each case in accordance with the terms
hereof). This Acquisition Note was issued pursuant to the Acquisition Agreement
dated February 12, 2020 (the “Acquisition Agreement”).

1.        SECTION ONE - GENERAL TERMS

1.1.Maturity Date. The “Maturity Date” shall be May 31, 2020, as may be extended
at the option of the Holder, or as provided herein.

1.2.        No Assignment. This Note is non-assignable.

1.3. 1.3. Interest Rate. Interest shall accrue on the outstanding principal
balance hereof at an annual rate equal to eight percent (8%) (“Interest Rate”),
provided that if any Event of Default has occurred and is continuing and has not
been cured within the time prescribed, interest shall accrue on the outstanding
principal balance hereof at an annual rate equal to fifteen percent (15%)
(“Default Interest Rate”). Interest shall be calculated on the basis of a
365-day year and the actual number of days elapsed, to the extent permitted by
applicable law.

1.4. 1.4. Cash Repayment Period. The Company shall pay to the Holder the
Principal and Interest on or before the Maturity Date (the “Cash Repayment
Period”). If the Company does not pay Principal and Interest during the Cash
Repayment Period and prior to the Maturity Date, the Company shall lose the
right for cash payment of Principal and Interest and shall pay off the Note upon
demand of the Holder any time during the established period and in accordance
with the term outlined herein (the “Alternative Payment Period”)

 1 

 

 

1.5. 1.5. Amended Maturity. Should the Company not pay to the Holder the
Principal and Interest on or before the Maturity Date, the Maturity Date shall
be automatically modified to five (5) years after the Issuance Date. The
automatic modification shall not trigger a default.

1.6. 1.6. Alternative Payment. Should the Company not pay the Holder the
Principal and Interest during the Cash Repayment Period, the Holder will hold
the right to receive payment as outlined herein (the “Alternative Payment
Stake”) or (“Buy Out Option”).

2.        SECTION TWO - EVENTS OF DEFAULT

2.1. 2.1. “Event of Default”, wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

2.1.1. 2.2. The Company’s failure to pay to the Holder any amount of Principal,
Interest or other amounts when and as due and payable under this Note or provide
for conversion as outlined herein;

2.1.2. 2.3. The Company or any subsidiary of the Company shall commence, or
there shall be commenced against the Company or any subsidiary of the Company
under any applicable bankruptcy or insolvency laws as now or hereafter in effect
or any successor thereto, or the Company or any subsidiary of the Company
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the
Company or any subsidiary of the Company or there is commenced against the
Company or any subsidiary of the Company any such bankruptcy, insolvency or
other proceeding which, in all of such cases, remains undismissed for a period
of 61 days; or the Company or any subsidiary of the Company is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Company or any subsidiary of the Company
suffers any appointment of any custodian, private or court appointed receiver or
the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or the Company or
any subsidiary of the Company makes a general assignment for the benefit of
creditors; or the Company or any subsidiary of the Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or the Company or any subsidiary of the Company
shall call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or the Company or any subsidiary of
the Company shall by any act or failure to act expressly indicate its consent
to, approval of or acquiescence in any of the foregoing; or any corporate or
other action is taken by the Company or any subsidiary of the Company for the
purpose of effecting any of the foregoing;

a.The Company or any subsidiary of the Company shall default in any of its
obligations under any other Note or any mortgage, credit agreement or other
facility, indenture agreement, factoring agreement or other instrument under
which there may be issued, or by which there may be secured or evidenced any
indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement of the Company or any subsidiary of the Company in an
amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created and such default shall result in such indebtedness becoming
or being declared due and payable prior to the date on which it would otherwise
become due and payable unless the Company is contesting such obligations in good
faith;

 2 

 

 

b.The Company's (A) failure to cure a Conversion Failure by delivery of the
required number of shares of Common Stock within five (5) Business Days after
the applicable Conversion Failure or by notice, written or oral, to any holder
of the Notes, including by way of public announcement, at any time, of its
intention not to comply with a request for conversion of any Notes into shares
of Common Stock that is tendered in accordance with the provisions of the Notes;

c.The Company shall fail to observe or perform any other material covenant,
agreement or warranty contained in, or otherwise commit any material breach or
default of any provision of this Note.

2.2.2.4. Default Prior to Original Maturity Date. During the time that any
portion of this Note is outstanding, if any Event of Default occurs prior to the
original Maturity Date, the full unpaid Principal amount of this Note, together
with interest and other amounts owing in respect thereof, to the date of
acceleration shall become, at the Holder's election, immediately due and payable
in cash.

2.3.2.5. Default After the Original Maturity Date. During the time that any
portion of this Note is outstanding after original Maturity Date, if any Event
of Default, full payment in cash shall be due to the Holder for the full value
of the Note on an as converted to common stock basis. The price at which this
conversion will take place will be the average closing price of the common
shares during the twenty (20) days preceding the Default.

3. SECTION THREE – ALTERNATIVE PAYMENT OF THE NOTE

4.In the event the Maturity Date is extended due to non payment during the Cash
Repayment Period, the holder shall two options for repayment: 1) An Alternative
Payment Stake, or 2) Buy Out Option.

5.3.1. Alternative Payment Stake. In the event the Maturity Date is extended due
to non payment during the Cash Repayment Period, the Holder will have the
option, not withstanding the limitations outlined in Section Six, but not the
obligation, at anytime after August 12, 2020 to have the Note satisfied by
converting the outstanding value into a 6.75% (0.0675) fully diluted ownership
position in the Company in an Alternative Payment Stake or a percentage of the
outstanding value into a prorated amount of the outstanding value into a
prorated amount in into a prorated 6.75% (0.0675) fully diluted ownership
position in the Company. Upon receiving the Alternative Payment Stake, the
Acquisition Noteholder will forgive the accumulated interest amount and this
forgiven interest will not factor into any conversion calculation.

 3 

 

 

 

5.1.3.2 Registration. In the event the Maturity Date is extended due to non
payment during the Cash Repayment Period, prior to June 27, 2020, the Company
will cause a registration statement to be filed with the Securities & Exchange
Commission to register the underlying common shares represented by the
Alternative Payment Stake, should the Holder request such registration prior to
June 15, 2020. At anytime after June 15, 2020, any Holder will have the right to
request registration of any common shares received under this agreement and the
Company shall have an obligation to register the shares within 90 days of any
such notification.

5.2.3.3. Buy Out Option. In the event the Maturity Date is extended due to
non-payment during the Cash Repayment Period, the Holder will have the option,
but not an obligation, to force repayment of the Note via exercise of a Buy Out
Option. Anytime after the Note is outstanding for at least one (1) year, the
Holder has the option to elect repayment of the Note in cash at forty percent
(40%) of the value that would have been received if the option for the
Alternative Payment Stake had been exercised. The calculation for the Buy Out
Option is as follows: On the date of the election for the Buy Out Option, the
cash value would be total outstanding common shares of the Company on the day of
election, times 6.75% (0.0675), times the average closing price of the common
shares over the preceding 30 trading days, times 40%. The Company shall have
ninety (90) days to make this payment in cash to the Holder.

5.2.1. SECTION FOUR – ANTI-DILUTION RIGHTS

5.2.2. 4.1. Absolute Anti-Dilution Rights. Holders of Acquisition Notes and
Alternative Payments Stakess shall be protected by broadly defined anti-dilution
rights. MCTC shall not, by amendment of its Certificate of Incorporation or
Bylaws, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
or by any other means, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed relative to this absolute
anti-dilution right and shall furthermore at all times in good faith assist in
the carrying out of all the provisions relating to this absolute antidilution
right and in the taking of all such action whether or not requested by the
Conversion Noteholders or Conversion Shareholders in order to protect these
rights against dilution or other impairment, consistent with the tenor and
purpose of these rights. Such rights shall pertain to all class of securities on
an as-converted to common shares basis.

5.2.3. 4.2. Further Anti-Dilution Rights for Acquisition Notes and Alternative
Payment Stakes.

5.2.4. 4.2.1 Relative to any Alternative Payments Stakes. Assuming the
underlying shares held were registered by MCTC as outlined in Section 1.6 and
converted, holders of Alternative Payments Stakes shall have unlimited
anti-dilution rights on the Alternative Payments Stake for one hundred eight two
(182) days after conversion. Should any dilutive issuance take place during this
period, the Company shall issue additional common shares to the Holders to
return the Holder to the same percentage ownership in the Company, less any
liquidated or sold acquisition shares. If the underlying shares are not
registered as outlined in Section 1.6, holders of Alternative Payments Stakes
shall hold anti-dilution rights for a period of three (3) years after receipt of
Alternative Payments Stakes. Should for ANY reason, any holder of Alternative
Payments Stakes experience any dilution under the terms outlined above, for any
reason, including the issuance of any convertible or preferred security, or any
other securities, of any type, the holder shall be immediately granted
additional shares so as to maintain percentage ownership. Such rights shall
pertain to all class of securities on an as-converted to common shares basis.
These rights are absolute and shall be broadly interpreted in favor of the
Holders. Furthermore at all times the Company shall in good faith assist in the
carrying out of all the provisions relating to this absolute anti-dilution right
and in the taking of all such action whether or not such actions are requested
by the Alternative Payments Stakeholders.

 4 

 

 

5.2.5. 4.2.2. Relative to Acquisition Notes. Holders of Acquisition Notes shall
have unlimited anti-dilution rights for a period of five (5) years from the date
of the Notes. These rights are absolute and shall be broadly interpreted in
favor of the holder of the Acquisition Notes. Furthermore, at all times the
Company shall in good faith assist in the carrying out of all the provisions
relating to this absolute anti-dilution right and in the taking of all such
action whether or not such actions were requested by Acquisition Note holders.

5.2.6. SECTION FIVE - CONVERSION

5.2.7. 5.1. Conversion Mechanics from Alternative Payment Stakes to Common
Shares. To convert into shares of Common Stock on any date (a “Conversion
Date”), the Holder shall transmit by email (or otherwise deliver), for receipt
on or prior to 11:59 p.m., Los Angeles Time, on such date, a copy of an executed
notice of conversion in the form attached hereto as Exhibit I (the “Conversion
Notice”) to the Company. On or before the third Business Day following the date
of receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall
(X) if legends are not required to be placed on certificates of Common Stock and
provided that the Transfer Agent is participating in the Depository Trust
Company's (“DTC”) Fast Automated Securities Transfer Program, credit such
aggregate number of shares of Common Stock to which the Holder shall be entitled
to the Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder shall be entitled which certificates shall
not bear any restrictive legends unless required pursuant to rules and
regulations of the Commission. If this Note is physically surrendered for
conversion and the outstanding Principal of this Note is greater than the
Principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than three (3) Business Days
after receipt of this Note and at its own expense, issue and deliver to the
holder a new Note representing the outstanding Principal not converted. The
Person or Persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the record holder
or holders of such shares of Common Stock upon the transmission of a Conversion
Notice.

 5 

 

 

5.2.8. 5.2. Company's Failure to Timely Convert. If within five (5) Trading Days
after the Company's receipt of a Conversion Notice the Company shall fail to
issue and deliver a certificate to the Holder or credit the Holder's balance
account with DTC for the number of shares of Common

Stock to which the Holder is entitled upon such holder's conversion of any
Conversion Amount (a “Conversion Failure”), and if on or after such Trading Day
the Holder purchases (in an open market transaction or otherwise) Common Stock
to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon
such conversion that the Holder anticipated receiving from the Company then the
Company shall, within five (5) Business Days after the Holder's request and in
the Holder's discretion, the Company shall be placed in Default of the Note and
full payment in cash shall be due to the Holder for the full value of the Note
on an as converted to common stock basis. The price at which this conversion
will take place will be the average closing price of the common shares during
the 20 days preceding the Default.

5.2.9. 5.3. Book-Entry. Notwithstanding anything to the contrary set forth
herein, upon conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to
the Company unless (A) the full Principal amount and all accrued and unpaid
Interest represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be included in
a Conversion Notice) requesting reissuance of this Note upon physical surrender
of this Note. The Holder and the Company shall maintain records showing the
Principal and Interest converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the Holder and the Company, so as
not to require physical surrender of this Note upon conversion.

5.3.SECTION SIX – LIMITS TO CONVERSION AND SALES OF ALTERNATIVE PAYMENTS STAKE

5.3.1. 6.1. Leak Out Provision on Alternative Payments Stakes. The holders of
the Alternative Payments Stakes shall be bound by a Leak Out Agreement
restricting sales of the Acquisition Shares to no more than 30% of total
holdings during the first 30 days after clearance of the shares for trading and
no more than 25% of the remaining shares during any additional 30 days period.
Holders of the Alternative Payments Stake shall be automatically released from
the Leak Out Agreement if the average daily dollar trading volume of MCTC common
shares exceeds an average of $30,000 per day for any fifteen-day trading period
after conversion.

5.3.2. 6.2. Beneficial Ownership. The Holder shall not have the right to convert
any portion of this Note hereunder to the extent that after giving effect to
such conversion, the Holder, together with any affiliate thereof, would
beneficially own (as determined in accordance with Section 13(d) of the Exchange
Act and the rules promulgated thereunder) in excess of 9.99% of the number of
shares of Common Stock outstanding immediately after giving effect to such
conversion. Since the Holder will not be obligated to report to the Company the
number of shares of Common Stock it may hold at the time of a conversion
hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 9.99% of the then outstanding shares of Common
Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular conversion hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of the principal amount of this Note is
convertible shall be the responsibility and obligation of the Holder. If the
Holder has delivered a Conversion Notice for a principal amount of this Note
that, without regard to any other shares that the Holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall honor the
conversion for the maximum principal amount permitted to be converted on such
Conversion Date and, any principal amount tendered for conversion in excess of
the permitted amount hereunder shall remain outstanding under this Note. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 65 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver. To clarify, unless the
Conversion Notice requests a number of shares of Common Stock in excess of 9.99%
of the outstanding number of shares of Common Stock, the Company may follow the
instructions of Holder contained in the Conversion Notice without liability.

 6 

 

 

5.3.3. 6.3. Other Conversion Limitations. Conversions shall not be allowed
should such a conversion (i) violate any provision of the charter, bylaws or
other organizational or constitutional documents, (ii) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any Governmental Authority to which the holder is
subject, (iii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which the holder is a party
or by which it is bound or to which any of its assets are subject.

5.3.4. SECTION SEVEN OTHER PROVISIONS

5.4. 7.1. Security Interest. Security Interest/Waiver of Automatic Stay. This
Note is secured by a security interest granted to the Holder pursuant to a
Security Agreement, as delivered by Company to Holder. The Company acknowledges
and agrees that should a proceeding under any bankruptcy or insolvency law be
commenced by or against the Company, or if any of the Collateral (as defined in
the Security Agreement) should become the subject of any bankruptcy or
insolvency proceeding, then the Holder should be entitled to, among other relief
to which the Holder may be entitled under the Transaction Documents and any
other agreement to which the Company and Holder are parties and/or applicable
law, an order from the court granting immediate relief from the automatic stay
pursuant to 11 U.S.C. Section 362 to permit the Holder to exercise all of its
rights and remedies pursuant to the Loan Documents and/or applicable law. THE
COMPANY EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C.
SECTION 362. FURTHERMORE, THE COMPANY EXPRESSLY ACKNOWLEDGES AND AGREES THAT
NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE

BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT

LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR
INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE

LAW. The Company hereby consents to any motion for relief from stay that may be
filed by the Holder in any bankruptcy or insolvency proceeding initiated by or
against the Company and, further, agrees not to file any opposition to any
motion for relief from stay filed by the Holder. The Company represents,
acknowledges and agrees that this provision is a specific and material aspect of
the Loan Documents, and that the Holder would not agree to the terms of the Loan
Documents if this waiver were not a part of this Note. The Company further
represents, acknowledges and agrees that this waiver is knowingly, intelligently
and voluntarily made, that neither the Holder nor any person acting on behalf of
the Holder has made any representations to induce this waiver, that the Company
has been represented (or has had the opportunity to he represented) in the
signing of this Note and the Loan Documents and in the making of this waiver by
independent legal counsel selected by the Company and that the Company has
discussed this waiver with counsel.

 7 

 

 

5.5. 7.2. Common Share Reserve. The Company shall at all times reserve and keep
available out of its authorized Common Stock the full number of shares of Common
Stock issuable upon conversion of all outstanding amounts under this Note; and
within five (5) Business Days following the receipt by the Company of a Holder's
notice that such minimum number of Underlying Shares is not so reserved, the
Company shall promptly reserve a sufficient number of shares of Common Stock to
comply with such requirement.

5.5.1. The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of this Note and payment of interest on
this Note, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder, not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in this Note or in the Transaction Documents) be issuable (taking into
account the adjustments and restrictions set forth herein) upon the conversion
of the outstanding principal amount of this Note and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, and nonassessable.

5.5.2. Nothing herein shall limit a Holder's right to pursue actual damages or
declare an Event of

Default pursuant herein for the Company’s failure to deliver certificates
representing shares of Common Stock upon conversion within the period specified
herein and such Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief, in each case without the need to post a
bond or provide other security. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.

6. 7.3. Change of Control Conversion. In addition to and not in substitution for
any other rights hereunder, prior to the consummation of any Change of Control
Transaction or a Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities or other assets with respect to
or in exchange for shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will thereafter have
the right to receive upon a conversion of this Note, at the Holder's option, (i)
in addition to the shares of Common Stock receivable upon such conversion, as
adjusted for the terms of the Corporate Event, such securities or other assets
to which the Holder would have been entitled with respect to such shares of
Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any
limitations or restrictions on the convertibility of this Note) or (ii) in lieu
of the shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in
connection with the consummation of such Corporate Event in such amounts as the
Holder would have been entitled to receive had this Note initially been issued
with conversion rights for the form of such consideration (as opposed to shares
of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. The provisions of this Section shall apply similarly and
equally to successive Corporate Events and shall be applied without regard to
any limitations on the conversion or redemption of this Note

 8 

 

 

7.        SECTION EIGHT REISSUANCE OF THIS NOTE

7.1. 8.1. Transfer. This Note is fully transferable. If this Note is to be
transferred, the Holder shall surrender this Note to the Company, whereupon the
Company will forthwith issue and deliver upon the order of the Holder a new Note
(in accordance with Section 6(d)), registered in the name of the registered
transferee or assignee, representing the outstanding Principal being transferred
by the Holder and, if less then the entire outstanding Principal is being
transferred, a new Note (in accordance with Section 6(d)) to the Holder
representing the outstanding Principal not being transferred. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of
the provisions of Section 4(b)(iii) following conversion or redemption of any
portion of this Note, the outstanding Principal represented by this Note may be
less than the Principal stated on the face of this Note.

7.2. 8.2. Lost, Stolen or Mutilated Note. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of
an indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Note,
the Company shall execute and deliver to the Holder a new Note (in accordance
with Section 6(d)) representing the outstanding Principal.

7.3. 8.3. Issuance of New Notes. Whenever the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the
Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest from the Issuance Date.

 9 

 

 

8.        SECTION NINE OTHER PROVISIONS

9. 9.1 NOTICES. Any notices, consents, waivers or other communications required
or permitted to be given under the terms hereof must be in writing by letter and
email and will be deemed to have been delivered: upon the later of (A) either
(i) receipt, when delivered personally or (ii) one (1) Business Day after
deposit with an overnight courier service with next day delivery specified, in
each case, properly addressed to the party to receive the same and (B) receipt,
when sent by electronic mail or at such other address and/or electronic email
address and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party 3 Business Days prior to
the effectiveness of such change. Written confirmation of receipt (i) given by
the recipient of such notice, consent, waiver or other communication, (ii)
mechanically or electronically generated by the sender’s computer containing the
time, date, recipient’s electronic mail address and the text of such electronic
mail or (iii) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by electronic mail or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

a)                  Except as expressly provided herein, no provision of this
Note shall alter or

impair the obligations of the Company, which are absolute and unconditional, to
pay the principal of, interest and other charges (if any), or convert to common
shares as outlined herein, on, this Note at the time, place, and rate, and in
the coin or currency, herein prescribed. This Note is a direct obligation of the
Company.

b)                  This Note shall not entitle the Holder to any of the rights
of a stockholder

of the Company, including without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of stockholders or any other proceedings of the Company, unless and to
the extent converted into shares of Common Stock in accordance with the terms
hereof.

c)                  No indebtedness of the Company is senior to this Note in
right of payment,

whether with respect to interest, damages or upon liquidation or dissolution or
otherwise. Without the Holder’s consent, the Company will not and will not
permit any of their subsidiaries to, directly or indirectly, enter into, create,
incur, assume or suffer to exist any indebtedness of any kind, on or with
respect to any of its property or assets now owned or hereafter acquired or any
interest therein or any income or profits there from that is senior in any
respect to the obligations of the Company under this Note.

d)                  TO INDUCE HOLDER TO PURCHASE THIS CONVERTIBLE NOTE, THE
COMPANY IRREVOCABLY AGREES THAT ANY DISPUTE ARISING UNDER,

RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS

AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS
AGREEMENT ANY OTHER TRANSACTION DOCUMENT (WHETHER OR NOT SUCH CLAIM IS BASED
UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION
AND VENUE OF THE STATE COURTS SITTING IN UNION COUNTY, NEW JERSEY AND THE
FEDERAL COURTS SITTING IN NEWARK, NEW JERSEY; PROVIDED, HOWEVER, HOLDER MAY, AT
ITS SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS
PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY
AND INTERPRETED CONSISTENT WITH NEW JERSEY LAW. THE

COMPANY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY, AND WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND CONSENT THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE COMPANY AS SET FORTH HEREIN IN
THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.

 10 

 

 

e)                  If the Company fails to materially comply with the material
terms of this Note, then, unless otherwise determined by the Court, the Company
shall reimburse the Holder promptly for all fees, costs and expenses, including,
without limitation, reasonable attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Note, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any
proceeding or appeal; or (iv) the protection, preservation or enforcement of any
rights or remedies of the Holder

f)                   Any waiver by the Holder of a breach of any provision of
this Note shall

not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Note. The failure of
the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. Any waiver must be in writing.

g)                  If any provision of this Note is invalid, illegal or
unenforceable, the balance

of this Note shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to all other
persons and circumstances. If it shall be found that any interest or other
amount deemed interest due hereunder shall violate applicable laws governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum permitted rate of interest. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of or
interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

h)                  Whenever any payment or other obligation hereunder shall be
due on a day

other than a Business Day, such payment shall be made on the next succeeding
Business Day.

[Signature Page Follows]

 

 

 

 11 

 

 

IN WITNESS WHEREOF, the Company has caused this Seller’s Acquisition Note to be
duly executed by a duly authorized officer as of the date set forth above.

 

MCTC HOLDINGS, INC.

 

/s/ ARMAN TABATABAEI

ARMAN TABATABAEI - CEO

DATE 2/12/2020

 

 

/s/ ROBERT L. HYMERS

ROBERT L. HYMERS - CFO

 

DATE: 2/12/2020

 12 

 

EXHIBIT I

CONVERSION NOTICE

 

(To be executed by the Holder in order to Convert the Note)

TO: MCTC HOLDINGS, INC.

Via Email: [__________________]

 

The undersigned hereby irrevocably elects to convert a portion of the
outstanding Note into Alternative Conversion Stakes as outlined in the Note
Agreement.

 

Conversion Date: Principal Amount:

 

Please issue the shares of Common Stock in the following name and to the
following address:

Issue to:

 

Authorized Signature:

Name:

Title:

 

 

 

 13