THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
M EDIJ ANE H OLDINGS I NC.
C ONVERTIBLE P ROMISSORY N OTE
U.S.$1,200,000
December 23, 2014
FOR VALUE RECEIVED, M EDIJ ANE H OLDINGS I NC. , a Nevada corporation
(“MJMD”), promises to pay to CannaVest Corp., a Delaware corporation (“Investor”), or its
permitted assigns, in lawful money of the United States of America the principal sum of One
Million Two Hundred Thousand Dollars (U.S. $1,200,000), or such lesser amount as shall equal
the outstanding principal amount hereof, together with interest from the date of this Convertible
Promissory Note (this “Note”) on the unpaid principal balance at a rate equal to ten percent
(10)% per annum, computed on the basis of the actual number of days elapsed and a year of 365
days. All unpaid principal, together with any then unpaid and accrued interest and other amounts
payable hereunder, shall be due and payable on the earlier of (i) the date that is six (6) months
from the date of this Note referenced above (the “Maturity Date”), (ii) immediately upon or after
the occurrence of an Event of Default (as defined below), or (iii) pursuant to a Change of
Control.
The following is a statement of the rights of Investor and the conditions to which this
Note is subject, and to which Investor, by the acceptance of this Note, agrees:
1.
Definitions. As used in this Note, the following capitalized terms have the
following meanings:
(a)
“Affiliate” means means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control with, such Person, it
being understood for purposes of this definition that “control” of a Person means the power
directly or indirectly either to vote 10% or more of the stock having ordinary voting power for
the election of directors of such Person or direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
(b)
“Bloomberg” means Bloomberg, L.P.
(c)
“Business Day” means any day other than a Saturday, Sunday or any
other day on which nationally chartered banks are authorized to be closed in the State of New
York.
DOCS 120416-000001/2107904.1
(d)
“Change of Control” shall mean (i) the acquisition of MJMD by another
entity by means of any transaction or series of related transactions (including, without limitation,
any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for
capital raising purposes) other than a transaction or series of transactions in which the holders of
the voting securities of MJMD outstanding immediately prior to such transaction continue to
retain (either by such voting securities remaining outstanding or by such voting securities being
converted into voting securities of the surviving entity), as a result of shares in MJMD held by
such holders prior to such transaction, at least fifty percent (50%) of the total voting power
represented by the voting securities of MJMD or such surviving entity outstanding immediately
after such transaction or series of transactions; (ii) a sale, lease or other conveyance of all or
substantially all of the assets of MJMD except from MJMD; or (iii) the commencement of any
liquidation, dissolution or winding up of MJMD, whether voluntary or involuntary.
(e)
“Closing Sale Price” means the last closing trade price for MJMD’s
Common Stock on an Eligible Market, as reported by Bloomberg, or, if the Eligible Market
begins to operate on an extended hours basis and does not designate the closing trade price, then
the last trade price of MJMD’s Common Stock prior to 4:00 p.m., New York time, as reported by
Bloomberg, or, if the Eligible Market is not the principal securities exchange or trading market
for for such security, the last trade price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other
similar transaction during such period.
(f)
“Conversion Price” means the lesser of (i) $0.02, as adjusted for any stock
split, stock dividend, stock combination or other similar transaction, (ii) the Closing Sale Price,
or (iii) the arithmetic average of the lowest Closing Sale Prices of MJMD Common Stock during
the five (5) Trading Day period immediately preceding the date of such determination.
(g)
“Conversion Shares” shall mean the shares of Common Stock of MJMD
issued by MJMD pursuant to the terms hereof.
(h)
“Eligible Market” means The New York Stock Exchange, NYSE Amex,
the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the
OTC Bulletin Board.
(i)
“Event of Default” has the meaning given in Section 5 hereof.
(j)
“Investor” shall mean the Person specified in the introductory paragraph
of this Note or any Person who shall at the time be the registered holder of this Note.
(k)
“Obligations” shall mean and include all loans, advances, debts, liabilities
and obligations, howsoever arising, owed by MJMD to Investor of every kind and description
(whether or not evidenced by any note or instrument and whether or not for the payment of
money), now existing or hereafter arising under or pursuant to the terms of this Note, including,
all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs
chargeable to and payable by MJMD hereunder and ▇▇▇▇▇▇▇▇▇▇, in each case, whether direct or
indirect, absolute or contingent, due or to become due, and whether or not arising after a Change
of Control or the commencement of a proceeding under Title 11 of the United States Code (11 U.
S. C. Section 101 et seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.
(l)
“Person” shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited liability company, an
unincorporated association, a joint venture or other entity or a governmental authority.
(m)
“Registration Statement” means a registration statement of MJMD under
the 1933 Act covering securities of MJMD (including Common Stock) on Form S-3, if MJMD is
then eligible to file using such form, and if not eligible, on Form S-1 or other appropriate form.
(n)
“SEC” means the Securities and Exchange Commission.
(o)
“Share Reserve” the number of shares of Common Stock determined by
dividing (i) the sum of (A) all such unpaid principal plus (B) all unpaid and accrued interest
under this Note by (ii) the Conversion Price.
(p)
“Trading Day” means any day on which the Common Stock is traded on
the Eligible Market, or, if the Eligible Market is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded; provided that, “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any
day that the Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New
York time) unless such day is otherwise designated as a Trading Day in writing by Investor.
(q)
The “1934 Act” shall mean the Securities and Exchange Act of 1934, as
amended.
(r)
The “1933 Act” shall mean the Securities Act of 1933, as amended.
2.
Payment. In consideration for the issuance of this Note to Investor, Investor shall
deliver to MJMD 50kg of Investor’s “CBD GOLD”™, at $0.10/mg of CBD at 24%
concentration for a total investment of $1,200,000.
3.
Prepayment. This Note may not be prepaid at any time without the prior written
consent of Investor. If this Note is not earlier converted as provided herein, all unpaid principal,
together with any then unpaid and accrued interest hereon, shall be due and payable on the
Maturity Date. MJMD will make all cash payments due under this Note in immediately
available funds by 5:00 p.m. New York local time on the date such payment is due.
4.
Investor Representations.
(a)
Securities Law Compliance. Investor has been advised that this Note and
the underlying securities have not been registered under the Securities Act, or any state securities
laws and, therefore, cannot be resold unless they are registered under the Securities Act and
applicable state securities laws or unless an exemption from such registration requirements is
available. Investor is aware that MJMD is under no obligation pursuant to this Note to effect any
such registration with respect to this Note or the underlying securities or to file for, or comply
with, any exemption from registration. Investor has not been formed solely for the purpose of
making this investment and is purchasing this Note for its own account for investment, not as a
nominee or agent, and not with a view to, or for resale in connection with, the distribution
thereof. Investor has such knowledge and experience in financial and business matters that
Investor is capable of evaluating the merits and risks of such investment, is able to incur a
complete loss of such investment and is able to bear the economic risk of such investment for an
indefinite period of time.
(b)
Accredited Investor. Investor is an accredited investor as such term is
defined in Rule 501 of Regulation D under the Securities Act.
(c)
Access to Information. Investor acknowledges that MJMD has given
Investor access to the corporate records and accounts of MJMD and to all information in its
possession relating to MJMD, has made its officers and representatives available for interview by
Investor, and has furnished Investor with all documents and other information required for
Investor to make an informed decision with respect to the purchase of this Note.
(d)
Transfer Restrictions. Investor acknowledges that (i) the Common Stock
issuable upon conversion of this Note has not been and will not be registered under the
provisions of the 1933 Act, and may not be transferred unless (A) subsequently registered
thereunder, or (B) Investor shall have delivered to MJMD an opinion of counsel, reasonably
satisfactory in form, scope and substance to MJMD, to the effect that the Common Stock to be
sold or transferred may be sold or transferred pursuant to an exemption from registration under
the 1933 Act; (ii) any sale of the Common Stock made in reliance on Rule 144 may be made
only in accordance with the terms of such Rule and further, if such Rule is not applicable, any
resale of such Common Stock under circumstances in which the seller, or the Person through
whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933
Act, may require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) except as otherwise provided herein, neither MJMD
nor any other Person is under any obligation to register the Securities under the 1933 Act or to
comply with the terms and conditions of any exemption thereunder.
(e)
Restrictive Legend. Investor acknowledges and agrees that, until such
time as the Common Stock has been registered under the 1933 Act, and may be sold in
accordance with an effective Registration Statement, or until such Common Stock can otherwise
be sold without restriction, whichever is earlier, the certificates and other instruments
representing any of the Common Stock shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of any such Common
Stock):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN
COMPARABLE TRANSACTIONS OR OTHER EVIDENCE ACCEPTABLE
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED, OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
5.
MJMD Representations and Warranties.
(a)
Reporting Status. During the term of this Note and so long as Investor
beneficially owns the Conversion Shares, and for at least twenty (20) Trading Days thereafter,
MJMD shall file all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of
the 1934 Act, and shall take all reasonable action under its control to ensure that adequate current
public information with respect to MJMD, as required in accordance with Rule 144, is publicly
available, and shall not terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such termination.
(b)
Piggyback Registrations. From and after the time this Note is converted
to Common Stock of MJMD, MJMD shall notify Investor in writing at least fifteen (15) Trading
Days prior to the filing of any Registration Statement for purposes of a public offering of
securities of MJMD (including, but not limited to, Registration Statements relating to secondary
offerings of securities of MJMD) and will afford Investor an opportunity to include in such
Registration Statement all or part of the Conversion Shares. If Investor desires to include in any
such Registration Statement all or any part of the Conversion Shares, then Investor shall, within
fifteen (15) Trading Days after the above-described notice from MJMD, so notify MJMD in
writing. Such notice shall state the intended method of disposition of the Conversion Shares by
Investor. In the event Investor desires to include less than all of the Conversion Shares in any
Registration Statement, it shall continue to have the right to include any Conversion Shares in
any subsequent Registration Statement or Registration Statements as may be filed by MJMD
with respect to offerings of its securities, all upon the terms and conditions set forth herein.
(c)
Share Reserve. In order to allow for, as of the relevant date of
determination, the conversion of the Obligations into Common Stock, MJMD shall take all
action necessary to reserve for the benefit of Investor the number of authorized but unissued
shares of Common Stock equal to the Share Reserve.
6.
Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:
(a)
Failure to Pay. MJMD shall fail to pay (i) when due any principal or
interest payment on the due date hereunder or (ii) any other payment required under the terms of
this Note or any other agreement of the parties on the date due, and such payment shall not have
been made within five (5) days of MJMD’s receipt of Investor’s written notice to MJMD of such
failure to pay; or
(b)
Breaches of Covenants. MJMD shall fail to observe or perform any other
covenant, obligation, condition or agreement contained in this Note and (i) such failure shall
continue for thirty (30) days after MJMD receives notice thereof from Investor, or (ii) if such
failure is not curable within such 30-day period, but is reasonably capable of cure and MJMD
shall not have commenced a cure in a manner reasonably satisfactory to Investor within the
initial 30-day period or at any time thereafter ceases to use commercially practicable efforts to
effect such cure; or
(c)
Voluntary Bankruptcy or Insolvency Proceedings. MJMD shall (i) apply
for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all
or a substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its creditors, (iv) be
dissolved or liquidated, (v) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or consent to any such relief or to the appointment
of or taking possession of its property by any official in an involuntary case or other proceeding
commenced against it, or (vi) take any action for the purpose of effecting any of the foregoing; or
(d)
Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of MJMD, or of all or a substantial part
of the property thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to MJMD or the debts thereof under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within thirty (30) days of
commencement; or
(e)
Cessation of Operations. Any cessation of operations by MJMD, or
MJMD admits it is otherwise generally unable to pay its debts as such debts become due;
provided, however, that any disclosure of MJMD’s ability to continue as a “going concern” shall
not be an admission that MJMD cannot pay its debts as they become due; or
(f)
Share Reserve. MJMD’s failure to maintain the Share Reserve.
7.
Notice of Events of Default and Change of Control; Rights of Investor upon
Default. MJMD shall furnish to Investor, promptly upon the occurrence thereof, written notice
of the occurrence of any Event of Default hereunder and, not less than ten (10) days prior to a
Change of Control, written notice of any proposed Change of Control. Immediately upon the
occurrence or existence of any Event of Default and at any time thereafter during the
continuance of such Event of Default, all outstanding Obligations payable by MJMD hereunder
shall be immediately due and payable without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived, anything contained herein to the contrary
notwithstanding. In addition to the foregoing remedy, upon the occurrence or existence of any
Event of Default, Investor may exercise any other right, power or remedy granted to it under this
Note or otherwise permitted to it by law, either by suit in equity or by action at law, or both.
Upon an Event of Default, all unpaid obligations under this Note shall bear interest at the default
rate of 12% per annum.
8.
Conversion.
(a)
Optional Conversion. At any time prior to, on or following the Maturity
Date, the outstanding principal amount of, and all accrued but unpaid interest under, this Note
shall be convertible at the option of the holder into that number of Conversion Shares determined
by dividing (i) the sum of (A) all such unpaid principal plus (B) all unpaid and accrued interest
under this Note by (ii) the Conversion Price.
(b)
Mechanics of Conversion. To exercise its right to convert this Note
pursuant to Section 8(a), Investor shall deliver (whether via email, facsimile or otherwise) to
MJMD a copy of an executed notice of conversion substantially in the form attached hereto as
Exhibit A (the “Conversion Notice”). Investor shall promptly thereafter surrender this Note to a
reputable overnight courier for delivery to MJMD (or an indemnification undertaking with
respect to this Note in the case of its loss, theft or destruction).
(c)
Fractional Shares; Interest; Effect of Conversion. No fractional shares
shall be issued upon conversion of this Note. In lieu of MJMD issuing any fractional shares to
Investor upon the conversion of this Note, MJMD shall pay to Investor an amount equal to the
product obtained by multiplying the Conversion Price by the fraction of a share not issued
pursuant to the previous sentence. Upon conversion of this Note in full and the payment of any
amounts specified in this Section 8(c), MJMD shall be forever released from all its obligations
and liabilities under this Note.
9.
Successors and Assigns. Subject to the restrictions on transfer described in
Sections 11 and 12 below, the rights and obligations of MJMD and Investor shall be binding
upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.
10.
Waiver and Amendment. Any provision of this Note may only be waived,
amended or modified upon the written consent of MJMD and Investor.
11.
Registration and Replacement of this Note; Transfer of Note and Securities
Issuable on Conversion Hereof. MJMD will keep, at its principal executive office, books for
the registration and registration of transfer of this Note. Prior to presentation of this Note for
registration of transfer, MJMD shall treat the Person in whose name such Note is registered as
the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall
be overdue, and MJMD shall not be affected by notice to the contrary. Subject to any
restrictions on or conditions to transfer set forth elsewhere in this Note, the holder of this Note, at
its option, may in person or by duly authorized attorney surrender the same for exchange at
MJMD’s chief executive office, and promptly thereafter and at MJMD’s expense, except as
provided below, receive in exchange therefor one or more new Notes in the name of such holder,
each in the principal (or for the number of shares, as applicable) requested by such holder, dated
the date to which interest shall have been paid on the Note so surrendered or, if no interest shall
have yet been so paid, dated the date of the Note so surrendered and registered in the name of
such Person or Persons as shall have been designated in writing by such holder or its attorney for
the same principal amount as the then unpaid principal amount of the Note so surrendered (or for
the number of shares, as applicable). Upon receipt by MJMD of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Note and
(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the
case of mutilation, upon surrender thereof, MJMD, at its expense, will execute and deliver in lieu
thereof a new Note executed in the same manner as the Note being replaced, in the same
principal amount as the unpaid principal amount of such Note and dated the date to which
interest shall have been paid on such Note or, if no interest shall have yet been so paid on such
Note, dated the date of such Note.
12.
Assignment by MJMD. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by
MJMD without the prior written consent of Investor, such consent not to be unreasonably
withheld, delayed or conditioned.
13.
Notices.
All notices, requests, demands, consents, instructions or other
communications required or permitted hereunder shall be in writing and faxed, mailed or
delivered to each party at the respective addresses of the parties as set forth on the signature page
hereto, or at such other address or facsimile number as MJMD shall have furnished to Investor in
writing. All such notices and communications will be deemed effectively given the earlier of
(i) when received, (ii) when delivered personally, (iii) one business day after being delivered by
facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited
with an overnight courier service of recognized standing or (v) four days after being deposited in
the U.S. mail, first class with postage prepaid.
14.
Payment. Payment shall be made in lawful tender of the United States, and all
references to dollar amounts shall refer to United States Dollars.
15.
Expenses; Waivers. If any action is instituted with a court to collect this Note,
MJMD shall pay all costs and expenses, including, without limitation, reasonable attorneys’ fees
and costs, incurred in connection with such action. MJMD hereby waives notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor and all other
notices or demands relative to this instrument. Each party shall bear its own fees and costs
incurred in connection with the consummation of the transactions contemplated by this Note.
16.
Governing Law; Venue. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed in accordance with the laws of the State of
Nevada, without regard to the conflicts of law provisions of the State of Nevada in every respect
including, without limitation, validity, interpretation, and performance. Any suit or proceeding
arising from or relating in any way to the subject matter of this Note shall be brought only in the
courts, state and federal, located in the State of Nevada, and the parties hereby consent to the
exclusive federal jurisdiction and venue of such courts.
17.
Failure or Indulgence Not Waiver. No failure or delay on the part of Investor in
the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
18.
Severability. In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict herewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note.
MEDIJANE HOLDINGS INC. has caused this Note to be issued as of the date first written
above.
M EDIJ ANE H OLDINGS I NC.
By:
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
Address:
2011 ▇▇▇ ▇▇▇▇▇ Blvd., Suite 300
Longmont, CO 80501
ACKNOWLEDGED AND AGREED:
CANNAVEST CORP.
By:
Name: ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
Title: Chief Executive Officer
Address:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇
Las Vegas, NV 89146
EXHIBIT A
CONVERSION NOTICE
Date:
Attn: Chief Executive Officer
2011 ▇▇▇ ▇▇▇▇▇ Blvd., Suite 300
Longmont, CO 80501
CONVERSION NOTICE
The above-captioned Investor hereby gives notice to MediJane Holdings Inc. (the “Company”),
pursuant to that certain Convertible Promissory Note made by the Company in favor of Investor (the
“Note”), that Investor elects to convert the portion of the Note balance set forth below into fully paid
and non-assessable shares of Common Stock of the Company as of the date of conversion specified
below. Said conversion shall be based on the Conversion Price set forth below. In the event of a
conflict between this Conversion Notice and the Note, the Note shall govern, or, in the alternative, at
the election of Investor (or the holder hereof) in its sole discretion, such holder may provide a new
form of Conversion Notice to conform to the Note. Capitalized terms used in this notice without
definition shall have the meanings given to them in the Note.
A. Date of conversion: ____________
B. Conversion Amount: ____________
C. Conversion Price: _______________
D. Conversion Shares: _______________ (C divided by D)
E. Remaining Outstanding Balance of Note: ____________
Sincerely,
CANNAVEST CORP.
By:
Name: ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
Title: Chief Executive Officer