GB SCIENCES LAS VEGAS, LLC
GB SCIENCES NEVADA LLC

 

8% Promissory Note

$470,000.00     December 3, 2019

 

FOR VALUE RECEIVED, GB SCIENCES LAS VEGAS, LLC, a Nevada limited liability
company (“GBS LV”), and GB SCIENCES NEVADA LLC, a Nevada limited liability
company (“GBS NV” and together with GBS LV, collectively, the “Borrower”) with
their principal executive offices at 3550 W. Teco Avenue, Las Vegas NV 89118,
jointly and severally promise to pay to the order of AJE MANAGEMENT, LLC (the
“Lender” or the “Holder of this Note”) or registered assigns, the principal
amount of Four Hundred [Seventy] Thousand Dollars ($470,000) Dollars, or such
lesser amount as shall equal the aggregate unpaid principal amount of the loans
made by Lender to the Borrower hereunder (the “Principal Amount”), together with
interest on such Principal Amount, on December 31, 2020 (the “Maturity Date”).
Interest on this Promissory Note (this “Note”) shall accrue on the Principal
Amount outstanding from time to time at a rate per annum computed in accordance
with Section 2 hereof.

 

Interest shall accrue on the Principal Amount outstanding from time to time and
shall be payable (i) upon maturity (whether at the Maturity Date, by
acceleration or otherwise) and (ii) at any time after maturity until paid in
full (after as well as before judgment), on demand. All computations of interest
hereunder shall be made based on the actual number of days elapsed in a year of
365 days (including the first day but excluding the last day during which any
such Principal Amount is outstanding). All payments by the Borrower hereunder
shall be applied first to pay any interest which is due, but unpaid, and then to
reduce the Principal Amount.

 

Each payment by the Borrower pursuant to this Note shall be made without set-off
or counterclaim and in immediately available funds by wire or check only. THIS
NOTE MAY NOT BE PAID OR PREPAID IN CASH. The Borrower (i) waives presentment,
demand, protest or notice of any kind in connection with this Note and (ii)
agrees to pay to the Holder of this Note, on demand, all costs and expenses
(including reasonable and documented legal fees and expenses) incurred in
connection with the enforcement and collection of this Note.

 

This Note has been issued to Lender pursuant to a Loan Agreement (as amended
from time to time, the “Loan Agreement”) of even date herewith. Unless otherwise
defined in this Note, capitalized terms used herein shall have the meanings set
forth in the Loan Agreement.

 

1.     Principal Repayment. This Note may be prepaid, in whole or in part, at
any

time or from time to time, without premium or penalty. All payments made on this
Note shall be applied first to interest accrued to the date of the payment, then
to other amounts which may then be due hereunder (other than principal), and
then to the outstanding principal amount of this Note.

 

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2.     Computation of Interest.

 

A.     Base Interest Rate. Subject to Sections 2B and 2C below, the outstanding
Principal Amount shall bear interest at the rate of eight (8%) percent per
annum.

 

B.     Penalty Interest. Upon the occurrence and during the continuance of an
Event of Default (as defined below), the rate of interest applicable to the
unpaid Principal Amount shall be increased to ten (10%) percent per annum.

 

3.     Covenants of Borrower.

 

A.     Affirmative Covenants. Each Borrower covenants and agrees that, so long
as this Note shall be outstanding, unless it has otherwise obtained the prior
written consent of the Lender, it will perform the obligations set forth in this
Section 3A:

 

(i)     Taxes and Levies. The Borrower will promptly pay and discharge all
taxes, assessments, and governmental charges or levies imposed upon the Borrower
or upon its income and profits, or upon any of its property, before the same
shall become delinquent, as well as all claims for labor, materials and supplies
which, if unpaid, might become a lien or charge upon such properties or any part
thereof; provided, however, that the Borrower shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings;

 

(ii)     Maintenance of Existence. The Borrower 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 Borrower, except where the failure to comply would not have a material
adverse effect on the Borrower;

 

(iii)     Maintenance of Property. The Borrower will at all times reasonably
maintain, preserve, protect and keep its property used or useful in the conduct
of its business in good repair, working order and condition (ordinary wear and
tear excepted), and from time to time make all needful and proper repairs,
renewals, replacements and improvements thereto as shall be reasonably required
in the conduct of its business;

 

(iv)     Insurance. The Borrower will, to the extent necessary for the operation
of its business, keep adequately insured by financially sound reputable
insurers, all property of a character usually insured by similar corporations
and carry such other insurance as is usually carried by similar corporations;

 

(v)     Maintenance of Teco Facility. The Borrower will hold and maintain all
duly issued certificates and licenses necessary to operate its cannabis
cultivation and production facility at 3550 W. Teco Avenue, Las Vegas, Nevada
(the “Teco Facility”) in accordance with all Nevada Legal Requirements;

 

 

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(vi)     Books and Records. The Borrower will at all times keep true and correct
books, records and accounts reflecting all of its business affairs and
transactions in accordance with GAAP. Such books and records shall be open at
reasonable times and upon reasonable notice to the inspection of the Lender or
its agents;

 

(vii)     Notice of Certain Events. The Borrower (will give prompt written
notice (with a description in reasonable detail) to the Lender of the occurrence
of any Event of Default or any event which, with the giving of notice or the
lapse of time, would constitute an Event of Default;

 

(viii)     Compliance with Laws. The Borrower will comply in all material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (“Law”), other than U.S. Federal Law
governing the production and sale of cannabis; and

 

(ix)     Use of Proceeds. The Borrower shall use the proceeds of Advances solely
to pay employees, vendors and other third party creditors of Borrower in
connection with the operation of the Teco Facility.

 

B.     Negative Covenants. Each Borrower covenants and agrees that, so long as
this Note shall be outstanding, unless it has otherwise obtained the prior
written consent of the Lender, it will perform the obligations set forth in this
Section 3B:

 

(i)     Liquidation, Dissolution. The Borrower will not (and will not permit any
of its subsidiaries to) liquidate or dissolve, consolidate with, or merge into
or with, any other corporation or other entity; provided, however, such prior
written consent shall not be required in connection with the consummation of any
merger or change of control transaction which results in prepayment of the Note
pursuant to the terms of this Note;

 

(ii)     Sales of Assets. The Borrower will not (nor permit any of its
subsidiaries with respect to their assets and properties), other than in the
ordinary course of business, sell, transfer, lease or otherwise dispose of, or
grant options, warrants or other rights with respect to, all or a substantial
part of its properties or assets material to the Borrower’s business to any
person or entity other than a direct or indirect subsidiary of the Borrower;

 

(iii)     Redemptions. The Borrower will not redeem or repurchase any
outstanding equity and/or debt securities of the Borrower;

 

(iv)     Indebtedness. Borrower will hereafter not create, incur, assume or
suffer to exist, contingently or otherwise, any indebtedness which is not
expressly subordinate in all respects to this Note, provided, that this covenant
shall not apply to (A) capitalized leases, purchase money indebtedness (secured
solely by Liens on the equipment or assets leased or purchased), (B) accounts
payable, or (C) other accrued expenses incurred by the Borrower in the ordinary
course of business;

 

 

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(v)     Negative Pledge. Other than with respect to this Note, the Borrower will
not (nor will it permit its subsidiaries to) hereafter create, incur, assume or
suffer to exist any mortgage, pledge, hypothecation, assignment, security
interest, encumbrance, lien (statutory or other), preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention

agreement and any financing lease) (each, a “Lien”) upon any of its property,
revenues or assets, whether now owned or hereafter acquired, except any of the
following (collectively, “Permitted Liens”):

 

(a)     Liens granted to secure indebtedness incurred (i) to finance the
acquisition (whether by purchase or capitalized lease) of tangible assets or
(ii) under equipment leases or purchase money indebtedness, but in each case,
only on the assets acquired with the proceeds of such indebtedness;

 

(b)     Liens for taxes, assessments or other governmental charges or levies not
at the time delinquent or thereafter payable without penalty or being contested
in good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;

 

(c)     Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;

 

(d)     Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds;

 

(e)     judgment Liens in existence less than 30 days after notice of the entry
thereof is forwarded to the Borrower or with respect to which execution has been
stayed; and

 

(f)     Liens set forth set forth on Schedule 3B(v).

 

(vi)     Transactions with Affiliates. The Borrower will not enter into any
transaction after the Issue Date, including, without limitation, the purchase,
sale, lease or exchange of property, real or personal, the purchase or sale of
any security, the borrowing or lending of any money, or the rendering of any
service, with any person or entity affiliated with the Borrower or any of its
subsidiaries (including officers, directors and shareholders owning five (5%)
percent or more of the Parent’s outstanding capital stock), except in the
ordinary course of and pursuant to the reasonable requirements of its business
and upon fair and reasonable terms not less favorable than would be obtained in
a comparable arms-length

 

 

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transaction with any other person or entity not affiliated with the Borrower as
determined by the Board of Directors in good faith.

 

(vii)     Dividends. The Borrower will not declare or pay any distributions on
its outstanding capital stock.

 

(viii)     Parent. Each Borrower will continue to be wholly-owned subsidiaries
of the Parent.

 

4.     Events of Default.

 

If any of the following events shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation by law or otherwise) (each, an “Event of Default”):

 

(i)     Non-Payment of Obligations. Borrower shall default in the payment of the
principal of this Note as and when the same shall become due and payable
(whether by acceleration or otherwise) or shall fail to pay accrued interest on
this Note within five (5) business days of when the same shall become due and
payable (whether by acceleration or otherwise);

 

(ii)     Non-Performance of Affirmative Covenants. Borrower shall default in the
due observance or performance of any covenant set forth in Section 3A, which
default shall continue uncured for ten (10) days;

 

(iii)     Non-Performance of Negative Covenants. Borrower shall default in the
due observance or performance of any covenant set forth in Section 3B, and, if
capable of cure, such default shall not have been cured within ten (10) days;

 

(iv)     Bankruptcy, Insolvency, Etc. Borrower shall:

 

(a)     in any legal document admit in writing its inability to pay its debts as
they become due;

 

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

 

(c)     in the absence of such application, consent or acquiesce in, permit or
suffer to exist the appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or for any part of its property;

 

(d)     permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy

 

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or insolvency law, or any dissolution, winding up or liquidation proceeding, in
respect of the Borrower, and, if such case or proceeding is not commenced by the
Borrower or converted to a voluntary case, such case or proceeding shall be
consented to or acquiesced in by the Borrower or shall result in the entry of an
order for relief; or

 

(e)     take any corporate or other action authorizing, or in furtherance of,
any of the foregoing;

 

(v)     Teco Facility. The Borrower shall fail to hold any required provisional
or permanent certificate (as applicable) under State or local law for the
operation of the Teco Facility as an establishment to cultivate and sell
cannabis;

 

(vi)     Cross-Default. Borrower shall default in the payment when due, after
the expiration of any applicable grace period, of any amount payable under any
other obligation of the Borrower for money borrowed in excess of $100,000;

 

(vii)     Cross-Acceleration. Any other indebtedness for borrowed money of
Borrower in an aggregate principal amount exceeding $100,000 shall be duly
declared to be or shall become due and payable prior to the stated maturity
thereof or shall not be paid as and when the same becomes due and payable
including any applicable grace period; or

 

(viii)     Other Breaches, Defaults. Borrower shall default or be in breach of
any other term or provision of this Note, any other Transaction Document (as
defined in the Loan Agreement), in any material respect, for a period of ten
(10) days, or any material representation or warranty made by the Borrower to
the Lender in any Transaction Document shall be materially false or misleading;

 

then, and in any such event, the Lender shall, by notice to the Borrower, take
or cause to be taken any or all of the following actions, without prejudice to
the rights of Lender to enforce its claims against the Borrower: (1) declare the
principal of and any accrued interest and all other amounts payable under this
Note to be due and payable, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower, (2) exercise any other remedies
available at law or in equity, either by suit in equity or by action at law, or
both, whether for specific performance of any covenant or other agreement
contained in this Note; provided, that upon the occurrence of any Event of
Default referred to in Section 4(iv) then (without prejudice to the rights and
remedies specified in clause (2) above) automatically, without notice, demand or
any other act by any Holder, the principal of and any accrued interest and all
other amounts payable under this Note shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower, anything contained in this Note to
the contrary notwithstanding. No remedy conferred in this Note upon any Holder
is intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy conferred
herein or now or hereinafter existing at law or in equity or by statute or
otherwise.

 

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5.     Amendments and Waivers.

 

A.     The provisions of this Note may from time to time be amended, modified or
supplemented, if such amendment, modification or supplement is in writing and
consented to by the Borrower and the Lender.

 

B.     No failure or delay on the part of the Lender in exercising any power or
right under this Note shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Lender shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.

 

C.     To the extent that the Borrower make a payment or payments to the Lender,
and such payment or payments or any part thereof are subsequently for any reason
invalidated, set aside and/or required to be repaid by the Lender to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all rights
and remedies therefor, shall be revived and continued in full force and effect
as if such payment had not been made by the Lender or such enforcement or setoff
had not occurred.

 

6.     Miscellaneous.

 

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

 

B.     Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Nevada without regard to the conflicts of laws
principles thereof.

 

C.     Waiver of Jury Trial. THE PAYEE AND THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND
DELIVERED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PAYEE OR THE COMPANY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE’S PURCHASING THIS NOTE.

 

 

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[Signature Page Follows]

 

 

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

 

 

 

GB SCIENCES LAS VEGAS, LLC GB SCIENCES NEVADA LLC,

By: GB SCIENCES, INC., as sole member

 

By: /s/ John Poss

Name: John Poss

Title: Chief Executive Officer

 

 

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SCHEDULE 3B(v)
LIENS