Holly Brothers Pictures, Inc. (Form: 8-K, Received: 11/22/2019 15:18:51)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (Date of earliest event reported):

November 15, 2019

____________________

HOLLY BROTHERS PICTURES, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction

of incorporation or organization)

000-55018

(Commission File

Number)

46-2111820

(I.R.S. Employer

Identification No.)

5580 Peterson Lane, Suite 200

Dallas, TX

(Address of principal executive offices)

75240

(Zip code)

Registrant’s telephone number, including area code: (214) 236-1363

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Not applicable	Not applicable	Not applicable

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [X]

Item 1.01.Entry into a Material Definitive Agreement.

Effective November 15, 2019, Holly Brothers Pictures, Inc. (the "Company") and Texas MDI, Inc. (“TMDI”), a Texas corporation, entered into a sublicense agreement (the "Agreement") granting the Company access to certain technology regarding the Rxoid^TM metered dose inhaler that TMDI has licensed from EM3 Methodologies, LLC (“EM3”) under the EM3 Exclusive License Agreement (the “EM3 Exclusive License Agreement”). The term of the Agreement is from November 15, 2019 until expiration of the EM3 Exclusive License Agreement. The expiration date of the EM3 Exclusive License Agreement is October 1, 2021, however, it is renewable for successive two year terms, subject to the payment of additional consideration by TMDI to EM3.

Pursuant to the EM3 Exclusive License Agreement, TMDI has obtained an exclusive license from EM3 to research, develop, make, have made, use, offer to sell, contract fill, export and/or import and commercialize the Licensed Products (as defined) using EM3’s proprietary Desirick Procedure which enables the production of a so-called metered dose inhaler (“MDI”) using hemp cannabinoid derivatives under the RxoidTM brand or on a white label basis. The MDI is a proven medical technology which is a complete replacement for vape cartridges and e-cigarettes without the typical dangers to cannabinoid (“CBD”) users. An MDI which is properly developed and manufactured delivers medication directly to a user’s blood stream through the pulmonary tract. They are generally sterile, stable, will not oxidize and have they a long shelf life not affected by light or temperature. MDI’s are efficient devices to deliver medication to humans. RxoidTM uses only FDA listed consumables and equipment in compliance with current good manufacturing processes (“cGMP”) to produce their products.

Per the terms of the Agreement, the Company has obtained a sublicense from TMDI to pursue certain commercial applications based on use of the Licensed Products in the States of Texas, California, Florida and Nevada exclusive of any other client of EM3. RxoidTM has made substantial material improvements to the Desirick Procedure prior to the execution of the EM3 Exclusive License which will remain the property of TMDI if any license is not renewed.

During the term of the Agreement, the Company shall be required to reimburse TMDI to the extent that TMDI is required to make any payments to EM3, pursuant to the EM3 Exclusive License Agreement, as a result of the Agreement. The Company’s obligation to make such reimbursements to TMDI is conditioned upon TMDI providing the Company with an advance notice requesting such payments, along with an accounting showing the calculations for such payments.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.

With execution of the Agreement, the Company has adopted a new business strategy focused on developing potential commercial opportunities which will involve the rapid application of therapeutics using the RxoidTM MDI technology that is being sublicensed from TMDI with prospective healthcare providers, pharmacies and other parties in the States of Texas, California, Florida and Nevada. Although the license with EM3 is exclusive to these four (4) states, RxoidTM may be marketed and produced world-wide on a non-exclusive basis. Simultaneously, the Company will be exiting from its previous operations in the bitcoin mining business, which has been suspended since the middle of 2018.

Item 2.03.Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Effective November 18, 2019, the Company entered into promissory notes with two accredited investors pursuant to which the Company borrowed a total of $300,000 (the “Notes”) as follows:

·The Company borrowed $150,000 from an investor under a Note with the following terms: (i) matures five years from the date of issuance: (ii) accrues interest at 5% per annum; and (iii) is convertible at the option of the holder into Company common stock at a conversion price of $0.05 per share.

·The Company borrowed $150,000 from an investor under a Note with the same interest rate and conversion provisions but with the following payment terms: (i) $75,000 shall be due upon the earlier of: (a) November 18, 2020, or (b) Such time that the Company has raised an additional $500,000 of new equity securities; and (ii) $75,000 shall be due at such time that the Company has raised an additional $250,000 for a cumulative total of $750,000 of new equity securities.

The foregoing description of the Notes does not purport to be complete and is qualified in its entirety by reference to the form of Notes, which are attached hereto as Exhibits 10.2 and 10.3, and are incorporated herein by reference.

Additionally, the Company has entered into an amendment with the various holders of currently outstanding non-convertible Notes Payable in the total principal amount of $737,835, which are in default, whereby such notes will remain outstanding and continue to accrue interest with deferral of the maturity dates being extended until the earlier of: (i) November 15, 2020, or (ii) Such time that the Company has raised an additional $500,000.00 of new equity securities, or other securities which are convertible into equity of the Company, at which time, the principal and accrued interest shall be converted into Company common stock at a conversion price of $0.05 per share.

The foregoing description of the amendment does not purport to be complete and is qualified in its entirety by reference to the Form of Amendment, a copy of which is attached hereto as Exhibit 10.3, and is incorporated herein by reference.

Item 3.02.Unregistered Sales of Equity Securities.

Pursuant to the offering described in Item 2.03 of this Current Report on Form 8-K, which description is incorporated by reference into this Item 3.02 in its entirety, the Company sold the Notes and amended the Notes Payable to and with “accredited investors,” as that term is defined in the Securities Act, in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws.

Item 5.01.Change in Control of Registrant.

The information set forth in Item 1.01 is incorporated herein by reference.

In accordance with the Agreement, the Company issued a total of 140,000,000 shares of its common stock, par value $0.001 per share, to TMDI, in consideration of the sublicense rights granted to the Company under the Agreement.

Following the issuance of the 140,000,000 shares of common stock to TMDI in accordance with the Agreement, the Company was advised that the two current holders of outstanding convertible Notes Payable in the amount of $1,100,000 each have decided to exercise their existing rights to convert their notes into shares of common stock. Based on their terms, such notes are convertible into common stock at a stated conversion ratio of $0.13 per share, however, they are subject to a per holder limitation of 4.99% of total shares outstanding. Therefore, each holder will be able to convert a note principal amount of only $1,017,380 into 7,826,000 shares of common stock leaving the remaining note principal amount of $82,620 unconverted. Between the two holders, a total of 15,652,000 new shares of common stock will result from this conversion leaving a total remaining note principal amount of $165,240, which will be convertible into a total of 1,271,077 shares of common stock.

As a result of the issuance of 140,000,000 shares to TMDI as consideration under the Agreement, and taking into account the additional near term share issuances to be made to the two convertible note holders indicated above, TMDI owns approximately 89% of the Company’s issued and outstanding common stock, thereby giving it control of the Company. Donal R. Schmidt, Jr.is the founder and President of TMDI, and has voting and dispositive control over the shares of Company common stock held by TMDI. Prior to the transaction, the Company was controlled by Brent Willson.

Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 15, 2019, the Company’s Board of Directors elected Donal R. Schmidt, Jr., TMDI’s President, as Chief Executive Officer of the Company, and D. Hughes Watler, Jr., an independent financial and accounting consultant, as the Chief Financial Officer of the Company. The Company’s Board of Directors also elected Messrs. Schmidt and Watler as members of the Board of Directors.

Donal R. Schmidt, Jr.is the founder and President of TMDI. Mr. Schmidt is an attorney and Certified Public Accountant with substantial combined business experience in both fields. In addition to earning a law degree, he has received advanced degrees in finance and accounting. He has previously run several successful public companies. In conjunction with his founding of TMDI, he has gained significant experience as an attorney and entrepreneur in the CBD s industry.

D. Hughes Watler, Jr. has been an independent financial and accounting consultant since 2017. From 2007 to 2017, he served as the Chief Financial Officer of Stack-It Storage, Inc. (OTCBB: STAK) and predecessor companies. He previously served as Senior Vice President & Chief Financial Officer of Goodrich Petroleum Corporation (NYSE: GDP) from 2003 to 2006 and as a financial officer of several other public and private energy companies from 1992 to 2003. Prior thereto, he was an audit partner with Price Waterhouse LLP and was on the firm’s audit staff.

The Company has not entered into any employment agreements with either Mr. Schmidt or Mr. Watler. Mr. Watler is expected to spend only a portion of his time on his duties with the Company, and to be compensated accordingly. Mr. Schmidt will spend a material portion of his time in his role as CEO.

Simultaneous with the election of Messrs. Schmidt and Watler as officers and directors of the Company, Brent Willson resigned as Chief Executive Officer and a member of the Board of Directors of the Company and Steve Bond resigned as Chief Financial Officer and a member of the Board of Directors of the Company.

Item 8.01.Other Events.

Effective November 15, 2019, the Company relocated its principal executive office to the following address and telephone number:

Holly Brothers Pictures, Inc.

5580 Peterson Avenue, Suite 200

Dallas, TX 75240

(214) 236-1363

Item 9.01.Financial Statements and Exhibits

(d)Exhibits.

The following Exhibits are filed herewith:

Exhibit No.	Description

10.1	Sublicense Agreement between Texas MDI, Inc. and Holly Brothers Pictures, Inc., dated as of November 15, 2019.
10.2	Form of Promissory Note issued by Holly Brothers Pictures, Inc. to an investor, dated as of November 18, 2019, with a five year maturity.
10.3	Form of Promissory Note issued by Holly Brothers Pictures, Inc. to an investor, dated as of November 18, 2019, with variable maturity terms.
10.4	Form of Amendment to certain Promissory Notes issued by Holly Brothers Pictures, Inc. to various holders, dated as of November 18, 2019.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HOLLY BROTHERS PICTURES, INC.

/s/ Donal R. Schmidt, Jr.

Donal R. Schmidt, Jr.

Chief Executive Officer

November 22, 2019

This SUBLICENSE AGREEMENT (the “Agreement”) effective as of November 15, 2019 (the “Effective Date”) is entered into by and between Texas MDI, Lnc. (“TMDI”), a Texas Texas for profit corporation, located at 5580 Peterson Ln., Suite 200, Dallas, Texas 75240 and Holly Brothers Pictures, Inc. (“HBP”), a Nevada for profit corporation, having a business address of 462 Stevens Ave., Ste. 310, Solana Beach, CA. TMDI and HBP are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, pursuant to the EM3 Exclusive License Agreement (defined below), TMDI has obtained an exclusive license to research, develop, make, have made, use, offer to sell, sell, export and/or import and commercialize the Licensed Products within the Licensed Territory for use within the Licensed Field;

WHEREAS, HBP wishes to obtain a sublicense from TMDI to research, develop, manufacture, use, export/import, offer to sell and/or sell the Licensed Products in the Sublicensed Field within the Sublicensed Territory;

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the Parties agree as follows:

Article I.

DEFINITIONS

As used in this Agreement, the following terms have the meanings indicated:

1.1 “Agreement” means this Sublicense Agreement.

1.2 “Claims” has the meaning set forth in Section 9.1 of this Agreement.

1.3 “TMDI” has the meaning set forth in the Header of this Agreement.

1.4 “Commercially Reasonable Development Efforts” means carrying out of obligations or tasks consistent with the reasonable best practices of the pharmaceutical industry for the development and/or commercialization of a pharmaceutical product having similar market potential, profit potential or strategic value as the applicable Licensed Product in the Sublicensed Field based on conditions then prevailing. Commercially Reasonable Development Efforts requires that HBP, at a minimum: (a) determine the general industry practices with respect to the applicable activities; (b) reasonably promptly assign responsibility for such obligations to specific employee(s) who are held accountable for progress and monitor such progress on an on-going basis; (c) set and consistently seek to achieve specific and meaningful objectives for carrying out such obligations; and (d) make and implement decisions and allocate resources designed to advance progress with respect to such objectives.

1.5 “Development Deadline” has the meaning set forth In Section 2.2 of this Agreement.

1.6 “Effective Date” is as defined in the Header of this Agreement.

1.7 “Texas MDI, Inc.” means Texas for profit corporation, having a business address of 5580 Peterson Ln., Ste. 200, Dallas, TX 75240.

1.8 “EM3 Exclusive License Agreement” is the License Agreement dated October 1, 2019 and entered into by and between TMDI and EM3; attached hereto as Exhibit A.

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1.9 “Indemnified Party” has the meaning set forth in Section 9.1 of this Agreement.

1.10 “Indemnifying Party” has the meaning set forth in Section 9.1 of this Agreement.

1.11 “Field” has the meaning set forth in the EM3 License Agreement.

1.12 “Licensed Product” has the meaning set forth in the EM3 License Agreement as well as the TMDl’s wholly owned Rxoid™ Brand ofCBD MDI.

1.13 “Licensed Territory” means any state listed in the Recitals the EM3 License Agreement.

1.14 “Losses” has the meaning set forth in Section 9.1 of this Agreement.

1.15 “Notice of Release” has the meaning set forth in Section 5.3 of this Agreement.

1.16 “Parties” has the meaning in the Header of this Agreement.

1.17 “Party” has the meaning in the Header of this Agreement.

1.18 “Release Period” has the meaning set forth in Section 5.3 of this Agreement

1.19 “Sublicensed Field” means the use of Licensed Product for the manufacturing of pMDl containing cannabis, hemp or a combination thereof in any legal jurisdiciton.

1.20 “Sublicensed Territory” means any state listed in the Recitals in the EM3 Ex1cusive License.

1.21 “Third Party” a Person or entity other than TMDI or HEP or any of their respective affiliates.

Article II.

SUBLICENSE

2.1 Subject to the tenns and conditions of this Agreement, TMDI hereby grants to HBP an exclusive sublicense to research, develop, manufacture, have manufactured, use, import, offer to sell and/or sell Licensed Products within the Sublicensed Territory for use within the Sublicensed Field. The Parties agree that the scope of the license rights granted pursuant to this Sublicense Agreement do not exceed the scope of rights conferred to TMDl pursuant to the EM3 License Agreement and such sublicense rights are subject to any and all restrictions and limitations set out therein.

2.2 HBP hereby agrees that it must use Commercially Reasonable Development Efforts to develop and commercialize Licensed Products for sale in the Sublicensed Territory within the Sublicensed Field within two (2) years of the execution of this Agreement. For the avoidance of doubt, HBP shall have no obligation to conduct any clinical studies of the Licensed Product. Commercially Reasonable Development Efforts shall be deemed to have occurred if during the period prior to the Development Deadline, either (i) Donal R. Schmidt, Jr. shall have served as CEO of TMDI; or (ii) TMDI shall hold a majority of HBP’s outstanding common stock. In the event that HBP fails to use Commercially Reasonable Development Efforts to develop a Licensed Product by the Development Deadline, TMDI shall have the right to terminate this Agreement pursuant to the terms specified in Section 6.2.

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Article III.

INFORMATION

3.1 Upon the request by TMDI, HBP shall furnish TMDI with written reports summarizing the Commercially Reasonable Development Efforts and progress of the research and development and all efforts to develop and/or commercialize a Licensed Product in the Sublicensed Territory within the Sublicensed Field. Such requests by TMDl shall not be made more that one (1) time per quarter during the tenn of this Agreement.

Article IV.

COMPENSATION

4.1 In consideration for the rights granted hereunder, upon the effective date, HBP shall issue to TMDI 140,000,000 shares of common stock representing approximately 70% of the total equity interests ofHBP.

4.2 As additional consideration for the rights granted hereunder, during the Tenn, to the extent TMDI is required to make any payments to EM3 pursuant to the EM3 License Agreement as a result of this Agreement, HBP shall be required to advance TMDI such payments upon demand by TMDI and an accounting showing the calculations for such payments.

4.3 Election of Donal R. Schmidt, Jr. as CEO and Chairman of HBP.

Article V.

TERM AND TERMINATION

5.1 This Agreement shall commence as of the Effective Date and shall expire upon termination of the EM3 Exclusive License Agreement unless this Agreement is earlier terminated pursuant to the terms of this Agreement (“Term”).

5.2 TMDI may terminate this Agreement by delivering a written notice of termination to HBP in the event that HBP fails to exercise Commercially Reasonable Development Efforts as specified in this Agreement. In such instance, TMDI must deliver the written notice of termination to HBP within thirty (30) days following the last date upon which HBP may provide TMDI evidence of its having exercised Commercially Reasonable Development Efforts by the Development Deadline. In the event that TMDI fails to deliver a written notice of termination pursuant to this Section this Agreement shall continue in force regardless of any failure by HBP to put forth Commercially Reasonable Development Efforts.

5.3 Either Party may terminate this Agreement in the following circumstances: (i) If a Party believes that the other Party is in material breach of this Agreement, the non-breaching party may deliver a written notice of such material breach to the other party, such notice to describe in detail the nature of such breach. The allegedly breaching party shall have 60 days from receipt of such notice to cure such breach. Any such termination shall become effective at the end of such 60-day period unless the breaching party has cured any such breach prior to the expiration of such period; or (ii) this agreement may be terminated by a Party upon written notice to the other Party in the event the other party becomes insolvent or if a petition in bankruptcy or for corporate reorganization or for any similar relief is filed by or against the other Party, or a receiver is appointed with respect to any assets of the other Party, or a liquidation proceeding is commenced by or against the other Party.

5.4 If this Agreement expires upon termination of the EM3 Agreement, all rights granted by TMDI to HBP hereunder shall revert to TMDI or otherwise cease.

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5.5 If this Agreement is terminated in its entirety by TMDI pursuant to Section 5.2 or 5.3 all rights granted by TMDI to HBP hereunder shall revert to TMDI, and upon TMDI’s written request HEP shall grant TMDI a royalty free non-exclusive license to all HBP know-how and patents and trademarks (if any) related to Licensed Products, including the transfer of all documentation and regulatory filings and registrations, and full rights therein, free of costs to TMDI.

5.6 If this Agreement is terminated in its entirety by HBP pursuant to Section 5.3 all rights granted by TMDI to HBP hereunder shall revert to TMDI. Further, upon TMD1’s written request HBP shall grant TMDI a royalty free non-exclusive license to all ALI know-how and patents and trademarks (if any) related to Licensed Products, including the transfer of all documentation and regulatory filings and registrations, and full rights therein subject to the Parties agreeing on appropriate consideration to HBP for such license.

Article VI.

REPRESENTATIONS, WARRANTIES AND COVENANTS

6.1 Except for the rights of EM3 as set forth below and except as may otherwise be set forth in this Agreement, TMDI represents and warrants that

(a) TMDI is the exclusive licensee of the Licensed Product and the Rxoid™ Brand and manufacturing processes and is entitled to grant the rights and licenses specified herein, subject to the terms and conditions of the EM3 License Agreement; and

(b) TMDI has not entered into any agreement granting any rights, interest or claim in or to any Licensed Products or brands, if any, to any Third Party that conflicts with the rights granted to TMDI pursuant to this Agreement;

6.2 N/A.

6.3 TMDI, by execution hereof, acknowledges, covenants and agrees that HBP has not been induced in any way by TMDI or employees thereof to enter into this Agreement, and further represents that HBP is entering into this Agreement voluntarily.

6.4 Each Party represents and warrants that:

(a) it is duly organized and validly existing under the Laws of its state of incorporation, and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

(c) this Agreement is legally binding upon it and enforceable in accordance with its terms; that the execution, delivery and performance of this Agreement by it does not conflict with any Agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any governmental entity having jurisdiction over it; and

(d) it has not granted, and will not grant during the term of the Agreement, any right to any Third Party that would conflict with the rights granted to the other Party hereunder; that it has (or will have at the time performance is due) maintained, and will maintain, and keep in full force and

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effect, all agreements, permits and licenses necessary to perform its obligations hereunder; and in complying with the terms and conditions of this Agreement and carrying out any obligations hereunder, it will comply (and it will ensure that its subcontractor’s comply) with all applicable laws, regulations, ordinances, statutes, and decrees or proclamations of all governmental entities having jurisdiction over such Party.

6.5 During the Term, TMDI agrees to exercise its renewal rights in the EM3 Exclusive License Agreement, provided that HBP provide TMDI with the Additional Consideration (as defined in the EM3 Exclusive License Agreement).

6.6 TMDI represents and warrants to HBP that it has the right to enter into this Agreement and that this Agreement does not violate the EM3 Exclusive License Agreement.

Article VII.

INFRINGEMENT BY THIRD PARTIES

7.1 If either TMDI or HBP becomes aware of any infringement or potential infringement of the Licensed Products, each shall promptly notify the other of such in writing. HBP, at its expense, shall have the first right to enforce any rights in the Sublicensed Territory exclusively licensed hereunder against infringement by Third Parties within the Sublicensed Field. With respect to infringement of the Licensed Products within the Sublicensed Field and/or Sublicensed Territory, if HBP does not file suit against a substantial infringer or take alternative action reasonably acceptable to TMDI to end such infringement in the Sublicensed Field and/or Sublicensed Territory, within three (3) months of its actual knowledge thereof, then, provided that such infringement is still on going, TMDI may, at its sole discretion, enforce the EM3 License against such infringement in the Sublicensed Territory and/or Sublicensed Field. The enforcing party shall be solely entitled to retain any and all recovery. Recoveries from any such enforcement in the Sublicensed Territory and/or Sublicensed Field shall be solely distributed to the enforcing party.

7.2 In any suit or dispute involving an infringer, the Parties agree to cooperate fully with each other. At the request and expense of the enforcing party, the other Party will permit access during regular business hours, to all reasonably relevant personnel, records, papers, information, samples, specimens, and the like in its possession.

Article VIII.

INDEMNITY

8.1 Each Party (the “Indemnifying Party”) hereby agrees to indemnify and hold harmless the other Party and its officers, directors, employees, consultants, contractors, sublicensees and agents (collectively, the “Indemnified Party”) from and against any and all losses, damages and other amounts payable to a claimant, as well as reasonable attorneys’ fees and costs (collectively, “Losses”), to the extent resulting from claims, suits, proceedings or causes of action (“Claims”) brought by a Third Party against the Indemnified Party based on or arising from: (a) breach of any representation or warranty or covenant or other agreement by the indemnifying party contained in this Agreement, or (b) negligence, recklessness or willful misconduct by such Indemnifying Party.

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8.2 In the event that any third party asserts a claim with respect to any matter for which the Indemnified Party is entitled to indemnification hereunder (a “Third-Party Indemnity Claim”), then the Indemnified Party shall promptly notify the Indemnifying Party thereof; provided. however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then, only to the extent that) the Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the right, exercisable by notice to the Indemnified Party within ten days of receipt of notice from the Indemnified Party of the commencement of or assertion of any Third-Party Indemnity Claim, to control the defense, settlement, appeal or other disposition of the Third-Party Indemnity Claim with counsel reasonably acceptable to the Indemnified Party; provided that, the Indemnified Party will have the right to participate jointly therein and provided, further, that if the Indemnifying Party fails to take reasonable steps necessary to defend such Third-Party Indemnity Claim, the Indemnified Party may assume it own defense and the Indemnifying Party will be liable for the reasonable costs and expenses in connection therewith. The Indemnifying Party will not settle any Third-Party Indemnity Claim except: (i) with the approval of the Indemnified Party, which approval shall not be unreasonably withheld or delayed and (ii) with respect to any Third-Party Indemnity Claim relating solely to the payment of money damages and which could not result in the Indemnified Party’s becoming subject to injunctive or other equitable relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to Indemnify the Indemnified Party hereunder; provided, that the Indemnifying Party shall provide reasonable evidence of its ability to pay any damages claimed and with respect to any such settlement shall obtain the written release of the Indemnified Party from the Third-Party Indemnity Claim. The Indemnifying Party shall obtain the written consent of the Indemnified Party prior to ceasing to defend, settling or otherwise disposing of any Third-Party Indemnity Claim if as a result thereof the Indemnified Party would become subject to injunctive or other equitable relief or the business of the Indemnified Party would be adversely affected in any manner.

IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY MULTIPLIED OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT, PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT REDUCE OR AFFECT EITHER PARTY’S OBLIGATIONS TO INDEMNIFY THE OTHER AGAINST THIRD-PARTY INDEMNITY CLAIMS.

Article IX.

CONFIDENTIALITY

9.1 The Parties shall negotiate in good faith and enter into a separate Non-Disclosure Agreement no later than thirty (30) calendar days after the Effective Date and this Agreement, including, the terms, conditions, duties and responsibilities under this Agreement shall be made subject to such Non-Disclosure Agreement.

Notwithstanding anything to the contrary as may be set forth in this Section 9.1, except where disclosure is required by law or upon the nondisclosing party’s written consent, the Parties agree that the terms and conditions of this Agreement and any non-published patent applications shall remain confidential as between the Parties and shall not be disclosed by either party to any Third Party, except as otherwise permitted herein. For clarity, the terms of this Agreement may be disclosed to EM3 in accord with the terms and conditions set forth in the EM3 License Agreement.

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Article X.

MISCELLANEOUS

10.1 The Parties shall execute and deliver any and all additional papers, documents, and other instruments and shall do any and all further acts and things reasonably necessary, if any, in connection with the performance of its obligation hereunder to carry out the intent of this Agreement.

10.2 This Agreement, including exhibits and schedules (if any) contains the entire understanding of the Parties, and supersedes all prior agreements and understandings between the Parties. This Agreement may be amended only by a written instrument signed by the Parties.

10.3 The waiver by any Party of any terms or condition of this Agreement, or any part hereof, shall not be deemed a waiver of any other term or condition of this Agreement, or of any later breach of this Agreement.

10.4 Any notice required by this Agreement will be given by personal delivery (including delivery by reputable messenger services such as Federal Express) or by prepaid, first class, certified mail, return receipt requested, addressed to:

If to HEP		If to TMDI

Holly Bothers Pictures		TMDI
Attention: President		Attention: CEO
462 Stevens Ave., Ste. 310		Donal R. Schmidt, Jr.
Solana Beach, CA 92075

10.5 This Agreement may be executed in counterparts, all of which together shall constitute a single agreement.

10.6 This Agreement will be governed by, construed and enforced in accordance with the laws of the State of Texas, Dallas County, Texas.

10.7 If any provision of this Agreement or application thereof to anyone is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application, and shall not invalidate or render unenforceable such provision or application. Further, the judicial or other competent authority making such determination shall have the power to limit, construe or reduce the duration, scope, activity and/or area of such provision, and/or delete specific words or phrases as necessary to render, such provision enforceable.

10.8 The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. The Exhibits (if any) to this Agreement are incorporated herein by reference and will be deemed a part of this Agreement. Unless otherwise expressly provided herein or the context of this Agreement otherwise requires, (a) words of any gender include each other gender, (b) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (c) words using the singular will include the plural, and vice versa, (d) the words “include,” “includes” and “ including” will be deemed to be followed by the phrase “but not limited to”, “without limitation”, “inter alia” or words of similar import, (e) the word “or” will be deemed to include the word “and” (e.g., “and/or”) and (f) references to “ARTICLE,” “Section,” “subsection”, “clause” or other subdivision, or to a Schedule or Exhibit, without reference to a document are to the specified provision, Schedule or Exhibit of this Agreement. This

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Agreement will be construed as if it were drafted jointly by the Parties and shall not be strictly construed against either Party.

10.9 Except for the payment of any amount due hereunder (other than any amount disputed in good faith), neither Party shall be liable to the other for any failure or delay in the fulfillment of its obligations under this Agreement, when any such failure or delay is caused by fire, flood, earthquakes, locusts, explosions, sabotage, terrorism, lack of adequate raw materials (caused by matters beyond the reasonable control of the performing Party), civil commotions, riots, invasions, wars, peril of the sea, acts, restraints, requisitions, regulations, or directions of government authorities (caused by matters beyond the reasonable control of the performing Party), acts of God, or any similar cause beyond the reasonable control of the performing Party (each, a “Force Majeure Event”). In the event that either Party is prevented from discharging its obligations under this Agreement on account of a Force Majeure Event, the performing Party will notify the other Party forthwith, and will nevertheless make every endeavor, in the utmost good faith, to discharge its obligations, even if in a partial or compromised manner. For clarity, a Force Majeure Event shall not excuse a Party from its obligation to pay any money due hereunder.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by their duly authorized representatives with full right, power and authority to enter into and perform under this Agreement.

TMDI, Inc.		HBP

By: /s/ Donal R. Schmidt, Jr.		By: /s/ Brent Willson
Date: November 13. 2019		Date: 14 November 2019

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EXCLUSIVE LICENSE AGREEMENT

THIS EXCLUSIVE LICENSE AGREEMENT (the “Agreement”) is made and entered into as of the 1st day of October 2019 (the “Effective Date”), by and between Texas MDI, Inc. a Texas for-profit corporation (the “Manufacturer”) and EM3 Methodologies, LLC, an Arizona limited liability company, and Richard Adams, individually a resident of Arizona, (collectively the “Company”). Company and Manufacturer may be collectively referred to herein as the “Parties,” and individually as a “Party.”

RECITALS:

WHEREAS, Company is a wholesaler of certain pharmacy products that are used to produce pressurized metered dose inhalers (“pMDI” or “MDI”) such as cans, valves, actuators (“Consumables”), as well as proprietary lab supplies;

WHEREAS, Company invented the process known as the Desirick Procedure which enables the production of MDI using cannabis and/or hemp derivatives through a proprietary formulation process;

WHEREAS, the Company currently trains third parties in use of the Desirick Procedure for a profit and in conjunction with that training sells filling equipment, Consumables, and proprietary lab supplies;

WHEREAS, the Company teaches third parties how to formulate cannabis and hemp compounds in liquid solutions to use in MDI;

WHEREAS, the Company is also the sole United States representative of Coster MDI, S.A. an FDA approved manufacture of MDI equipment and Consumables with which Manufacturer currently acquires the majority of its equipment and proprietary Consumables from for its MDI products under the RxoidTM brand pursuant to a separate license with the Company;

WHEREAS, the Company has direct but non-exclusive relationships with the only two (2) other manufactures of FDA approved filling equipment and Consumables;

WHEREAS, the Parties considers all of their collective suppliers and vendors related to MDI formulation and production to be Trade Secrets as that term in known in both Arizona and Texas under each states’ respective Uniform Trade Secrets statutes and they have made every effort to protect their Trade Secrets;

WHEREAS, the Manufacturer knowing that Company controls significant intellectual property which it sells for a profit to third parties, wishes to enter into this Agreement with Company wherein Manufacture is protected in certain Licensed Territories with respect to training, support, maintenance and access to Consumables and other products only sourced through Company and its suppliers which are Trade Secrets.

WHEREAS, the Manufacturer wishes to have Exclusivity with respect to License Products from the Company in the following states:

Texas, California, Florida and Nevada.

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NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1.DEFINITIONS

1.1.“Confidential Information” means information of a Party, to the extent not considered a Trade Secret under applicable law, that (i) relates to the business of the Parties, (ii) possesses an element of value to the Parties, (iii) is not generally known to the public, and (iv) would damage a Party if disclosed. Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure, (ii) has been independently developed and disclosed by others without violating this Agreement or the legal rights of any party, or (iii) otherwise enters the public domain through lawful means. This Agreement itself and any sublicense is designated as Confidential Information.

1.2.“License” means the right within the Licensed Territory or an individual state listed herein to research, develop, make, have made, use, offer to sell, sell, export and/or import and commercialize the Licensed Products for sale in the Field.

1.3.“Licensed Product” means the Desirick Procedure or any derivation thereof, including, but not limited to, related Consumables (cans, valves and actuators), filling equipment for pMDI, and/or proprietary lab equipment and training, support or maintenance thereon of any combination thereof.

1.4.“Field” means use of the Licensed Product for aerosol delivery of cannabis and/or hemp via pMDI.

1.5.“Exclusivity Period” means the time period during the Term or Renewal Term of this Agreement when the Company will strictly comply with Exclusivity.

1.6.“Exclusivity” shall mean that the Company will not during the Term or Renewal Term:

1.6.1.Train any entity or person in any Licensed Territory or state listed herein in any type of Desirick Procedure;

1.6.2.Sell any filling equipment, Consumables, or proprietary lab supplies to any entity or person in any Licensed Territory or state listed herein;

1.6.3.Provide support, assistance or knowledge of any Trade Secret of the Parties to any entity or person in any Licensed Territory or state listed herein; and

1.6.4.To the extent capable not assist or facilitate any original manufacturer or representative thereof of filling equipment, lab equipment or supplies, Consumables in selling or marketing to any entity or person in any Licensed Territory or state listed herein.

1.7.“Licensed Territory” means the four (4) states listed herein the Recitals and any state(s) agreed upon in writing in the future, but not limited to, any entity or person the Company is aware of that has a manufacturing facility for a MDI in the Field in a state listed in the Recitals. This definition shall not apply to internet marketing but only to entities or persons wishing to produce product in a physical location in the Licensed Territories.

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1.8.“Commercially Reasonable Development Efforts” means carrying out of obligations or tasks consistent with the reasonable best practices of the pharmaceutical industry for the development and/or commercialization of a pharmaceutical product having similar market potential, profit potential or strategic value as the applicable Licensed Product in the Field based on conditions then prevailing

2.CONSIDERATION

2.1.Consideration. The Company agrees to accept a cash or cash equivalent payment, at its soled discretion, to the assignee of its choice, of Two Hundred Thousand Dollars ($200,000). This Consideration must be paid in full within 30 days of the Effective Date or the Agreement is unilaterally null and void.

2.2.Additional Consideration for Renewal Term. Every two years Manufacturer shall pay to the Company an additional Two Hundred Thousand Dollars ($200,000) to retain Exclusivity in the Licensed Territory, Nevertheless, the Manufacturer will be entitled to Exclusivity in a single state of the Licensed Territory if they have purchased at least 100,000 MDI Consumables in that state (Purchase Minimums), in the preceding year regardless of any cash payment or not under this Agreement. This Exclusivity in an individual state shall be unique to each state and not cumulative, with the exception of Texas, which the Company will grant Exclusivity for CBD at all times while the Manufacturer purchases Consumables from the Company.

2.3.The Manufacturer and the Company agree that the Company may resume selling its Licensed Products in a state listed herein with written permission of the Manufacturer after the initial Term if the Manufacture has not paid the Additional Consideration or met its Purchase Minimums. However, if Manufacturer has begun Commercially Reasonable Development Efforts, as that term is defined, in a state in the Licensed Territory the Company agrees to give Manufacturer 90 days’ notice to cure such defect to prevent lapse of Exclusivity in any state or the Licensed Territory.

3.TERM AND TERMINATION OF AGREEMENT

3.1.Term of Agreement. The Term of this Agreement shall be for two (2) years, commencing on the Effective Date.

3.2.Renewal Term. This Agreement shall automatically renew itself on the same terms and conditions for successive two (2) year periods, subject to Additional Consideration as set forth in 2.2 above, unless earlier terminated as provided herein. Notwithstanding the foregoing, if the Agreement is rightfully terminated the Term or Renewal Term shall end upon such termination.

3.3.Termination. This Agreement may be terminated as follows:

3.3.1.Without Cause by Manufacturer. Manufacturer may terminate this Agreement by giving Company prior written notice pursuant to the notice provisions of Section 7.1. Such termination shall be effective on the 30th day following the date of such notice. And Consideration shall be fully earned by the Company.

3.3.2.Without Cause by Company. The Company may not terminate without cause.

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3.3.3.With Cause by Company. The Company may terminate with cause if this Agreement is breached; however, such cause shall be defined in writing and Manufacture shall have 90 days to cure any such alleged breach after notice under Section 7.1.

3.3.4.Mutual Termination. This Agreement may be terminated at any time by mutual agreement in writing between the Parties. Such termination under this section shall be effective on the date mutually agreed by the Parties.

3.3.5.Continuation of License. In the event that this agreement shall terminate, Manufacturer shall continue to have a License to use the Company’s Desirick Procedure for so long as it shall manufacture or distribute in a state listed herein regardless of loss of Exclusivity.

4.RESTRICTIONS ON COMPANY

4.1.Exclusivity. During the Exclusivity Period the Company shall not market, sell or otherwise give away or provide in any manner equipment, training, support or Consumables including, but not limited to, specialized lab equipment to any entity or person doing business in any way whatsoever in the Licensed Territory. The Company shall use its best efforts to inform any entity or person it becomes aware of and to who it provides services that it cannot support any activity that relates to the manufacture of an MDI in the Licensed Territory.

4.2.Notice to Suppliers. In the event that the Company is expressly asked by a supplier to the Company to act in the Licensed Territory or a state listed herein, the Company will not take such act but will inform any such supplier, if necessary, that it has a relationship in the Licensed Territory or state listed herein that will not allow the Company to provide sales, training or support for the suppliers’ products, except for sale of filling machines at the direction of Coster MDI, S.A. only.

4.3.Confidentiality Agreements. The Company shall add any customer of Manufacturer to its Confidentiality Agreements in a Licensed Territory. And any confidentiality agreements between the Parties remain in effect at all times.

5.REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1.Acknowledgements.

5.1.1.The Parties acknowledge that the restrictions contained in this Article 5 are reasonable and necessary to protect the legitimate business interests of the Parties.

5.1.2.The Parties further acknowledge that: (i) each Party may be in a position of trust and responsibility with access to Confidential Information and information concerning employees and business partners; and (ii) the Confidential Information, and the relationship between each Party and each of its employees and clients are valuable assets of the Parties and may not be used for any purpose other than furthering the services under this Agreement.

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5.1.3.Non-Solicitation. During the Exclusivity Period, both Parties shall not, on its own behalf or on behalf of any person or entity engaged in, solicit (or attempt to solicit) any client or potential client of the other Party for the purpose of providing any service or product competitive with the other Party in a Licensed Territory.

5.1.4.No Prior Agreements. The Company does not have any contractual agreements with any supplier or client that would prevent it from entering into this Agreement.

6.MUTUAL AND RECIPROCAL AGREEMENTS

6.1.During the term of this Agreement, Manufacturer shall continue to acquire from the Company as its sole supplier Consumables. Such acquisition shall be by mutual agreement and the Company shall have the right of first refusal to match any price from any other company in the event the Company cannot perform or deliver any necessary Consumable. Manufacture shall continue to comply with the Company’s existing confidentiality agreement.

6.2.In addition, Manufacturer shall contract with the Company for all support services it needs in the Licensed Territory at separately agreed upon rates for training, lab set up, manufacturing assistance, purchase of proprietary supplies, equipment, etc….

7.MISCELLANEOUS PROVISIONS

7.1.Notices. Any and all notices required hereunder shall be in writing, signed by the Party giving such notice, and shall be deemed to have been duly given or delivered if delivered personally or sent by recognized overnight delivery service with a signed receipt by the officer transmitted to. This provision may be accomplished by email if the receiving Party acknowledges such transmission.

7.2.Amendments. No provision of this Agreement may be altered, waived, modified or changed unless in writing, signed by the parties hereto, and no alleged verbal agreements, modifications or understandings shall be enforceable.

7.3.No Waiver. The failure of any party hereto in any one (1) or more instances to insist upon the performance of any of the terms and conditions of this Agreement, or to exercise any right or privilege conferred in this Agreement, or the waiver of any breach of any of the terms, covenants or conditions of this Agreement, shall not be construed as thereafter waiving any such terms, covenants, conditions, rights, or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

7.4.Entire Agreement. This Amendment, including all Addenda, which are hereby incorporated by reference, constitutes the entire agreement between the Parties concerning the subject matter of this Agreement. This Agreement supersedes any prior communications, agreements or understandings, whether oral or written, between the Parties relating to the subject matter of this Agreement. Other than terms of this Agreement, no other representation, promise or agreement has been made to cause Company to sign this Agreement.

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7.5.Governing Law. This Agreement shall be governed and construed according to the laws of the State of Texas.

7.6.Choice of Venue. Except as otherwise expressly provided in this Agreement, any action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or to enforce any arbitration award rendered pursuant to an agreed upon arbitration proceeding shall be brought in any state court located in the County of Dallas, State of Texas, and each Party hereto consents to the jurisdiction and venue of such court and hereby waives any objection that it may now or hereafter have to the personal jurisdiction and venue of such court and to any claim of inconvenient forum.

7.7.Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, but it may not be assigned by either party without the consent of the other.

7.8.Headings. The section headings herein contained are for convenience of reference only and shall not be deemed to impart substantive meaning to any provision or condition of this Agreement.

7.9.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7.10.Compliance with Applicable Laws; Change of Applicable Law. The parties hereto shall comply with all applicable local, state and federal laws, rules, regulations and restrictions governing their obligations and responsibilities under this Agreement (the “Applicable Laws”). If any provision of this Agreement shall reasonably be determined by either Party to violate any Applicable Law or if a change in Applicable Laws occurs which, in the opinion of counsel to the applicable Party, clearly or materially affects the legality of this Agreement for any Party or for all parties, the Parties agree that, upon written notice, they will negotiate in good faith to amend this Agreement appropriately. If the Parties are unable to agree, following good faith diligently pursued negotiations on an amendment or revision to this Agreement that satisfactorily resolves the issues raised by such Party’s notice, then such Party shall have the right to terminate the Term upon three (3) months’ prior written notice to each other Party. If a non-material provision of this Agreement shall be determined to be invalid or unenforceable by any court of law for any reason, such provision shall be deemed modified to the extent necessary to make it enforceable and the remainder of this Agreement shall be unaffected thereby and shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

COMPANY:		Manufacturer

EM3 Methodologies, LLC		Texas MDI, Inc.

/s/ Richard Adams		/s/ Donal R. Schmidt, Jr.
By: Richard Adams		By: Donal R. Schmidt, Jr.
Managing Member		President
and Individually

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THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) SHALL HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.

Holly Brothers Pictures, Inc.

5% UNSECURED CONVERTIBLE PROMISSORY NOTE

$150,000.00

November 18, 2019

FOR VALUE RECEIVED, Holly Brothers Pictures, Inc., a Nevada corporation (the “Company”), promises to pay to the order of [ ____________ ] (the “Payee” or the “Holder”) or registered assigns, the principal amount of One Hundred Fifty Thousand and 00/dollars ($150,000.00) (the “Principal Amount”) and interest on the Principal Amount (as set forth in Section 1), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Interest on this Note shall accrue on the Principal Amount outstanding from time to time at a rate per annum computed in accordance with Section 1 hereof.

1. Interest Rate and Payments; Prepayment.

A. The balance of principal outstanding from time to time under this Note shall bear interest at the rate of five percent (5.0%) per annum (the “Interest Rate”), computed on the basis of a three hundred sixty (360) day year composed of twelve (12) months of thirty (30) days each.

B. The entire outstanding Principal Amount, and all other amounts due under this Note, together with all accrued and unpaid interest thereon, shall be due and payable in full on the five-year anniversary of the date hereof, unless accelerated due to the occurrence of an Event of Default (the earlier of such dates is referred to as the “Maturity Date”).

2. Voluntary Conversion and No Forced Conversion.

A. Subject to Section 2.B. below, this Note shall be convertible at any time, in whole or in part, into shares of Company common stock (the “Common Stock”) at a conversion price equal to $0.05 per share (the “Conversion Price”), which Conversion Price shall be proportionately adjusted for stock splits, stock dividends or similar events. The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the interest or Principal Amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. Upon conversion, the Common Stock deliverable hereunder shall be issued within four (4) business days of the conversion date.

beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not amend or waive this paragraph without the consent of holders of a majority of its Common Stock.

C. The Note Holder shall not be compelled to convert any amount of the Note to Common Stock. Any conversion of the Note to Common Stock shall be done at the sole discretion of the Note Holder.

3. Certain Adjustments to the Conversion Price.

A. Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (collectively, “Common Stock Equivalents”); (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 3.A. shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re classification.

B. Subsequent Equity Sales. If the Company, at any time while this Note is outstanding, issues any Common Stock or Common Stock Equivalents entitling any person or entity to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than one business day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3.B., indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3.B., upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of shares of Common stock based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. The foregoing anti-dilution protection shall not apply to securities issued in connection with (i) shares issued pursuant to the Company’s incentive plans, (ii) shares issued for consideration other than cash pursuant to a vendor or consultant, or pursuant to a strategic relationship, joint venture, merger, consolidation, acquisition, or similar business combination approved by the Board; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; and (iv) shares issued with respect to securities outstanding as of the closing date.

4. Covenants of Company

A. Affirmative Covenants. The Company covenants and agrees that, so long as this Note shall be outstanding, it will perform the obligations set forth in this Section 4.A.:

(i) Maintenance of Existence. The Company will do or cause to be done all things reasonably necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and comply with all laws applicable to the Company, except where the failure to comply would not have a material adverse effect on the Company.

5. Events of Default

A. The term “Event of Default” shall mean any of the events set forth in this Section 5.A.:

(i) Non-Payment of Obligations. The Company shall default in the payment of the Principal Amount or accrued interest of this Note as and when the same shall become due and payable, whether by acceleration or otherwise.

(ii) Non-Performance of Affirmative Covenants. The Company shall materially default in the due observance or performance of any covenant set forth in Section 4.A.

(iii) Bankruptcy, Insolvency, etc. The Company shall:

(a) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company, or make a general assignment for the benefit of creditors; or

(b) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if such case or proceeding is not commenced by the Company or converted to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Company or shall result in the entry of an order for relief.

B. Action if Bankruptcy. If any Event of Default described in clause (iii) of Section 5.A. shall occur, the outstanding Principal Amount of this Note and all other obligations hereunder shall automatically be and become immediately due and payable, without notice or demand.

C. Action if Other Event of Default. Upon the occurrence of an Event of Default that goes uncured for more than 10 days after written notice thereof by Holder to the Company (other than any Event of Default described in clause (iii) of Section 5.A.) the entire outstanding principal of the Note together with the interest accrued thereon shall be immediately due and payable. The Company hereby waives any and all notices including notice of breach, notice of default, notice of intent to accelerate, notice of acceleration or any other demand or presentment that may be required.

6. Miscellaneous.

A. Parties in Interest. All covenants, agreements and undertakings in this Note binding upon the Company or the Payee shall bind and inure to the benefit of the successors and permitted assigns of the Company and the Payee, respectively, whether so expressed or not.

B. Governing Law. This Note shall be governed by the laws of the State of Nevada as applied to contracts entered into and to be performed entirely within the State of Nevada.

C. Arbitration. Any dispute, claim or controversy arising out of or relating to this Note or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in San Diego, California before a single arbitrator. Company shall be responsible for all arbitration costs of securing JAMS prior to the Award. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures (“Rules”) and in accordance with the Expedited Procedures in those Rules, including Rules 16.1 and 16.2 of those Rules. Judgment on the Award (as defined in the Rules) may be entered in any court having jurisdiction. The Company and Holder shall each select one independent arbitrator expert in the subject matter of the dispute (the arbitrators so selected shall be referred to herein as “Company’s Arbitrator” and “Holder’s Arbitrator,” respectively). In the event that either such party fails to select an independent arbitrator as set forth herein within 20 days from delivery of a notice of arbitration, then the matter shall be resolved by the arbitrator selected by the other party. Company’s Arbitrator and Holder’s Arbitrator shall select a third independent arbitrator expert in the subject matter of the dispute, and the three arbitrators so selected shall resolve the matter according to the procedures set forth in this section. If Company’s Arbitrator and Holder’s Arbitrator are unable to agree on a third arbitrator within 20 days after their selection, Company’s Arbitrator and Holder’s Arbitrator shall each prepare a list of three independent arbitrators. Company’s Arbitrator and Holder’s Arbitrator shall each have the opportunity to designate as objectionable and eliminate one arbitrator from the other arbitrator’s list within seven days after submission thereof, and the third arbitrator shall then be selected by lot from the arbitrators remaining on the lists submitted by Company’s Arbitrator and Holder’s Arbitrator.

The parties shall maintain the confidential nature of the arbitration proceeding and the Award, including the hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an Award or its enforcement, or unless otherwise required by law or judicial decision. The parties acknowledge that this Note evidences a transaction involving interstate commerce. Notwithstanding the provision in the preceding section with respect to applicable substantive law, any arbitration conducted pursuant to the terms of this Note shall be governed by the Federal Arbitration Act.

D. Notice. All notices shall be in writing, and shall be deemed given when actually delivered to a party at its address set forth herein personally, by a reputable overnight messenger.

E. No Waiver. No delay in exercising any right hereunder shall be deemed a waiver thereof, and no waiver shall be deemed to have any application to any future default or exercise of rights hereunder.

F. Assignability of Note by Holder. Holder shall be permitted to assign the Note to any party or person as it sees fit in its sole discretion. Assignee will be bound by the same terms and conditions as Note Holder, as set forth herein, following any assignment of the Note.

IN WITNESS WHEREOF, this Note has been executed and delivered on the date specified above by the duly authorized representative of the Company.

Holly Brothers Pictures, Inc.

By: /s/ Donal R. Schmidt, Jr.

Donal R. Schmidt, Jr., Chief Executive Officer

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal and interest under the 5% Convertible Note of Holly Brothers Pictures, Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

If required by applicable law, the undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Date to Effect Conversion: ____________________________

Principal Amount of Note to be Converted: $__________________

Accrued Interest to be Converted: $__________________________

Number of shares to be issued: ______________________________

Signature: _________________________________________

Name: ____________________________________________

Address for Delivery of Common Stock Certificates: ______________

______________________________________________________

The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended, or a non- “U.S. Person” within the meaning of Rule 902 of Regulation S promulgated under the Securities Act of 1933.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_____________________________________________________

Signature of Authorized Signatory of Investing Entity: ______________________________

Name of Authorized Signatory: _________________________________________________

Title of Authorized Signatory: __________________________________________________

Date: ______________________________________________________________________

Holly Brothers Pictures, Inc.

5% UNSECURED CONVERTIBLE PROMISSORY NOTE

$150,000.00

November 18, 2019

FOR VALUE RECEIVED, Holly Brothers Pictures, Inc., a Nevada corporation (the “Company”), promises to pay to the order of [ __________ ] (the “Payee” or the “Holder”) or registered assigns, the principal amount of One Hundred Fifty Thousand and 00/dollars ($150,000.00) (the “Principal Amount”) and interest on the Principal Amount (as set forth in Section 1), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. Interest on this Note shall accrue on the Principal Amount outstanding from time to time at a rate per annum computed in accordance with Section 1 hereof.

1. Interest Rate and Payments; Prepayment.

B. The outstanding Principal Amount, and all other amounts due under this Note, together with all accrued and unpaid interest thereon, shall be due and payable as follows: (a) Seventy Five Thousand and 00/dollars ($75,000.00) shall be due and payable upon the earlier of the following: (i) November 18, 2020, or (ii) Such time that the Company has raised an additional $500,000.00 of new equity securities, or other securities which are convertible into equity of the Company; and (b) the remaining Seventy Five Thousand and 00/dollars ($75,000.00) shall be due and payable at such time that the Company has raised an additional $250,000.00 for a cumulative total of $750,000.00 of new equity securities, or other securities which are convertible into equity of the Company, unless accelerated due to the occurrence of an Event of Default (the earlier of such dates is referred to as the “Maturity Date”).

2. Voluntary Conversion and No Forced Conversion.

B. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible into Common Stock to the extent (but only to the extent) that the Holder or any of its affiliates would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock. To the extent the conversion provisions of Section 2.A. would be limited by this Section 2.B, the portion of this Note not converted shall be converted into Common Stock at a later date or dates, provided that at such later date or dates the limitation in Section 2.B would no longer apply to the Holder because such Holder would no longer own in excess of the Maximum Percentage. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not amend or waive this paragraph without the consent of holders of a majority of its Common Stock.

C. The Note Holder shall not be compelled to convert any amount of the Note to Common Stock. Any conversion of the Note to Common Stock shall be done at the sole discretion of the Note Holder.

3. Certain Adjustments to the Conversion Price.

on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. The foregoing anti-dilution protection shall not apply to securities issued in connection with (i) shares issued pursuant to the Company’s incentive plans, (ii) shares issued for consideration other than cash pursuant to a vendor or consultant, or pursuant to a strategic relationship, joint venture, merger, consolidation, acquisition, or similar business combination approved by the Board; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; and (iv) shares issued with respect to securities outstanding as of the closing date.

4. Covenants of Company

A. Affirmative Covenants. The Company covenants and agrees that, so long as this Note shall be outstanding, it will perform the obligations set forth in this Section 4.A.:

5. Events of Default

A. The term “Event of Default” shall mean any of the events set forth in this Section 5.A.:

(ii) Non-Performance of Affirmative Covenants. The Company shall materially default in the due observance or performance of any covenant set forth in Section 4.A.

(iii) Bankruptcy, Insolvency, etc. The Company shall:

(a) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company, or make a general assignment for the benefit of creditors; or

6. Miscellaneous.

B. Governing Law. This Note shall be governed by the laws of the State of Nevada as applied to contracts entered into and to be performed entirely within the State of Nevada.

D. Notice. All notices shall be in writing, and shall be deemed given when actually delivered to a party at its address set forth herein personally, by a reputable overnight messenger.

E. No Waiver. No delay in exercising any right hereunder shall be deemed a waiver thereof, and no waiver shall be deemed to have any application to any future default or exercise of rights hereunder.

IN WITNESS WHEREOF, this Note has been executed and delivered on the date specified above by the duly authorized representative of the Company.

Holly Brothers Pictures, Inc.

By: /s/ Donal R. Schmidt, Jr.

Donal R. Schmidt, Jr., Chief Executive Officer

ANNEX A

NOTICE OF CONVERSION

Date to Effect Conversion: ____________________________

Principal Amount of Note to be Converted: $__________________

Accrued Interest to be Converted: $__________________________

Number of shares to be issued: ______________________________

Signature: _________________________________________

Name: ____________________________________________

Address for Delivery of Common Stock Certificates: _____________________

________________________________________________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity:_____________________________________________________

Signature of Authorized Signatory of Investing Entity: ______________________________

Name of Authorized Signatory: _________________________________________________

Title of Authorized Signatory: __________________________________________________

Date: ______________________________________________________________________

AMENDMENT TO PROMISSORY NOTES

This amendment (“Amendment”), dated as of November 18, 2019, is to those certain Promissory Notes in the total principal amount of $737,835.00 (the “Notes”), by and among Holly Brothers Pictures, Inc., a Nevada corporation (the “Company”) and the various Holders listed on the signature page hereto (the “Holders”). The Company and the Holders are referred to collectively as the Parties and individually as a Party. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Notes.

WHEREAS, the Company and Holders have agreed to modify the payment terms of the Notes and to make them ultimately eligible for conversion into equity of the Company,

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and mutual agreements herein contained, and intending to be legally bound herein, the Parties hereto agree as follows:

1. The Holders agree to defer the various maturity dates of the Notes until the earlier of the following: (i) November 18, 2020, or (ii) Such time that the Company has raised an additional $500,000.00 of new equity securities, or other securities which are convertible into equity of the Company.

2. The Holders agree that, through the extended maturity date of the Notes as indicated in Section 1. above, the Notes will continue to accrue interest, without any payment by the Company, at the rates and on the same terms as indicated in each Note.

3. Subject to Section 4. below, the Holders agree that, at such time that the Company has raised, in one or more offerings, an additional $500,000.00 of new equity securities, or other securities which are convertible into equity of the Company, the principal and accrued interest attributable to the Notes will be converted into Common Stock at a conversion price of $0.05 per share (which price shall be proportionately adjusted for stock splits, stock dividends or similar events, as indicated in Section 5. below).

4. Notwithstanding anything to the contrary contained in this Amendment, the Notes shall not be convertible into Common Stock to the extent (but only to the extent) that the Holder or any of its affiliates would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the Common Stock. To the extent the conversion provisions of Section 3. would be limited by this Section 4., the portion of each Note not converted shall be converted into Common Stock at a later date or dates, provided that at such later date or dates the limitation in Section 3.would no longer apply to the Holder because such Holder would no longer own in excess of the Maximum Percentage. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The holders of Common Stock shall be third party beneficiaries of this paragraph and the Company may not amend or waive this paragraph without the consent of holders of a majority of its Common Stock.

5. Certain Adjustments to the Conversion Price.

A.Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock (collectively, “Common Stock Equivalents”); (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury

shares of the Company) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 5.A. shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re classification.

B.Subsequent Equity Sales. If the Company, at any time while this Note is outstanding, issues any Common Stock or Common Stock Equivalents entitling any person or entity to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than one business day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5.B., indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5.B., upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of shares of Common stock based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion. The foregoing anti-dilution protection shall not apply to securities issued in connection with (i) shares issued pursuant to the Company’s incentive plans, (ii) shares issued for consideration other than cash pursuant to a vendor or consultant, or pursuant to a strategic relationship, joint venture, merger, consolidation, acquisition, or similar business combination approved by the Board; (iii) shares issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution approved by the Board; and (iv) shares issued with respect to securities outstanding as of the closing date.

6. This Amendment may be executed in any number of counterparts, each of which shall be deemed to bean original and all of which together shall be deemed to be one and the same instrument. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the date first indicated above.

		HOLLY BROTHERS PICTURES, INC.

	By:	/s/ D. Hughes Watler, Jr.
		Chief Financial Officer

HOLDERS

Name	Amount

Note holder	$145,000	By:


Note holder	$156,185	By:


Note holder	$170,000	By:


Note holder	$ 25,307	By:


Note holder	$ 24,509	By:


Note holder	$ 24,509	By:


Note holder	$ 24,608	By:


Note holder	$126,608	By:


Note holder	$ 24,609	By:


Note holder	$ 16,500	By:


Total	$737,835