EXHIBIT 10.8
 
  
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

GILLA, INC.
6% CONVERTIBLE CREDIT NOTE
 

$225,000.00      November 15, 2012

 
FOR VALUE RECEIVED, the undersigned, GILLA, INC., a Nevada corporation (the
“Company”), hereby promises to pay to the order of CREDIFINANCE CAPITAL CORP.,
money of the United States of America, and in immediately payable funds, the
aggregate unpaid principal amount of . the loan described in the Note Agreement
referred below. The principal hereof outstanding and any unpaid accrued interest
thereon shall be due and payable on or before February 15, 2014 (the “Maturity
Date”).  This Note shall bear interest on the unpaid principal balance from time
to time outstanding, until paid, at the rate of six percent (6%) per annum.
Interest shall accrue and be added to the principal amount of the Note at
maturity. Payment of all amounts due hereunder shall be made at the address of
the Noteholder.
 
The Note has been issued pursuant to a Note Agreement of even date herewith
between the Company and the Noteholder (the  “ Note Agreement”) (attached hereto
as Schedule “A”). Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Note Agreement. THE PROVISIONS OF THE NOTE AGREEMENT
ARE INCORPORATED HEREIN BY REFERENCE.

1. PAYMENTS. The Company hereby promises to pay to the Noteholder, in lawful
money of the United States of America, and in immediately payable funds, the
principal sum of the amount outstanding at the Maturity Date.  The principal
amount hereof and any unpaid accrued interest thereon shall be due and payable
on the Maturity Date (unless such payment date is accelerated as provided in
Section 5 hereof).  Payment of all amounts due hereunder shall be made at the
address of the Noteholder provided for this the Note Agreement.  The Company
further promises to pay interest at the rate of 6% per annum on the outstanding
principal balance hereof, such interest to be payable as provided above.

2. PREPAYMENT.  This Note may be prepaid, in whole or in part, without penalty
with five days prior written notice to the Noteholder.

 
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3. CONVERSION.  At any time subsequent to 30 days after the Maturity Date, the
outstanding principal amount of this Note, together with all accrued but unpaid
interest hereunder (the “Outstanding Balance”). Is convertible into Common
Stock, $0.0002 Par Value (the ‘Common Stock”), at the option of the Noteholder
at a conversion price of the lower of $0.01 or the average of the bid prices for
the Common Stock of the Company for the 15 trading days prior to the notice of
conversion.
 
In order to convert the outstanding Balance, Noteholder shall deliver to the
Company a written Election to Convert, a form of which is attached hereto as
Exhibit B.  Upon receipt of the written election to Convert, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the Noteholder, and shall such name or names of the Noteholder
may designate, a certificate or certificates for the full number of shares of
Common Stock so purchased upon conversion of the Note.  Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
securities as of the date of delivery of the Election to Convert,
notwithstanding that the certificate or certificates representing such
securities shall not actually have been delivered or that the stock transfer
book of the Company shall then be closed.
 
In the event that the outstanding Common Stock of the Company hereafter is
restructured or revised by recapitalization, reclassification, combination of
shares, stock split or split-up or stock dividend, the aggregate number and kind
of Common Stock subject to conversion under this Note shall be adjusted
appropriately, both as to the number of share of Common Stock and the Conversion
Price.  No fractional shares will be issued upon conversion, but any fractional
shares will be rounded up to the nearest whole share of Common Stock.
 
In case of any sale exchange, tender offer, redemption or buyout of the
Company’s Common Stock, or any consolidation of the Company with or merger of
the Company into another corporation, or in case of any sale, transfer or lease
to another corporation of all or substantially all other property of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall repay the outstanding amount plus interest accrued forthwith.
 
4. DEFAULT.  The occurrence of any one of the following events shall constitute
an Event of Default upon notice thereof as hereinafter provided:

a) The non-payment, when due, of any principal or interest pursuant to this
Note;

b) The material breach of any representation in this Note or in the Note
Agreement. .In the event the Noteholder becomes aware of a breach of this
Section 5 b), the Noteholder shall notify the Company in writing of such breach
and the Company shall have ten days’ notice to effect a cure of such breach;
 
 
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c) The material breach of any covenant or undertaking in this Note, not
otherwise provided for in this Section 4.  In the event the Noteholder becomes
aware of a breach of this Section 4 c), the Noteholder shall notify the Company
in writing of such breach and the Company shall have ten days’ notice to effect
a sure of such breach;

 
d) A default shall occur if the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any indebtedness of the
Company or an event of default or similar event shall occur with respect to such
indebtedness, if the effect of such default or event (subject to any required
notice and any applicable grace period) would be to accelerate the maturity of
any such indebtedness or to permit the holder or holders of such indebtedness to
cause such indebtedness to become due and payable prior to its express maturity;
 
e) The commencement by the Company of any voluntary proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment or debt,
receivership, dissolution, or liquidation law or statute or any jurisdiction,
whether now or hereafter in effect; or the adjudication of the Company as
insolvent or bankrupt by a decree of a court of competent jurisdiction; or the
petition or application by the Company for, acquiescent in, or consent by the
Company to, the appointment of any receiver or trustee for the Company, or for
all or a substantial part of the property of the Company; or the assignment by
the Company for the benefit of creditors; or the written admission of the
Company of its inability to pay its debt as they mature; or
 
f) The commencement against the Company of any proceeding relating to the
Company under any bankruptcy, reorganization, arrangement, insolvency,
adjustment of debt, receivership, dissolution or liquidation law or statute or
any jurisdiction, whether now or hereafter in effect, provided, however, that
the commencement of such a proceeding shall not constitute an Event of Default
unless the Company consents to the same or admits in writing the material
allegations of same, or said proceeding shall remain undismissed for 30 days; or
the issuance of any order, judgment or decree for the appointment of a receiver
or trustee for the Company or for all or a substantial part of the property of
the Company, which order, judgment process shall be issued against any
substantial part of the property of the Company.

Upon the occurrence of any Event of Default, the Noteholder may, by written
notice to the Company, declare all or any portion of the unpaid principal amount
due to Noteholder, together with all accrued interest thereon, immediately due
and payable.

5. NOTICES.  Any notice, request, instruction, or order document required by the
terms of this Note, or deemed by any of the Parties hereto to be desirable, to
be given to any other Party hereto shall be in writing, and shall be given by
personal delivery, overnight delivery, mailed by registered or certified mail,
postage prepaid, with return receipt requested, or sent by facsimile
transmission to the addresses of the Parties set forth below each Party’s
signature..  The persons and addresses set for the below each Party’s signature
on this Note may be changed from time to time by a notice sent as aforesaid.  If
notice is given by personal delivery or overnight delivery in accordance with
the provisions of this Section, such notice shall be conclusively deemed given
at the time of such delivery provided a receipt is obtained from the
recipient.  If notice is given by mail in accordance with the provisions of this
Section, such notice shall be conclusively deemed given upon receipt and
delivery or refusal.  If notice is given by facsimile transmission in accordance
with the provisions of this Section, such notice shall be conclusively deemed
given at the time of delivery if during business hours and if not during
business hours, at the next business day after delivery, provided a confirmation
is obtained by the sender.
 
 
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6. EXCLUSIVE JURISDICTION AND VENUE.  The Parties agree that the courts of the
State of Delaware shall have sole and exclusive jurisdiction and venue for the
resolution of all disputes arising under the terms of this Agreement and the
transactions contemplated herein.
 
7. GOVERNING LAW.  This Note shall be governed by and construed and interpreted
in accordance with the laws of the State of Delaware applicable to contracts
made and to be performed entirely therein, without giving effect to the rules
and conflicts of law.
 
8. CONFORMITY WITH LAW.  It is the intention of the Company and of the
Noteholder to conform strictly to applicable usury and similar
laws.  Accordingly, notwithstanding anything to the contrary in this Note, it is
agreed that the aggregate of all charges which constitute interest under
applicable usury and similar laws that are contract for, chargeable or
receivable under or in respect of this Note, shall under no circumstances exceed
the maximum amount of interest permitted by such laws, and any excess, whether
occasioned by acceleration or maturity of this Note or otherwise, shall be
canceled automatically, and if theretofore paid, shall be either refunded to the
Company or credited on the principal amount of this Note.

IN WITNESS WHEREOF, the Company has signed and sealed this Note and delivered it
in the State of Nevada as of November 15, 2012.
 

  COMPANY           GILLA, INC.    
A Nevada Corporation
       
 
By:
/s/ Danny Yuranyi       Name: Danny Yuranyi       Title: President & Chief
Operating Officer             By: /s/ Graham Simmonds       Name: Graham
Simmonds       Title: Chief Executive Officer  

 
 
NOTEHOLDER:
         
CREDIFINANCE CAPITAL CORP.
   
A Delaware Corporation
       
 
By:
/s/ Georges Benarroch       Name: Georges Benarroch       Title: President      
   

 
 
 
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EXHIBIT B

FORM OF ELECTION TO CONVERT

The undersigned, the holder of the attached Note, hereby irrevocably elects to
exercise their right to convert $________ of the Note into securities of Gilla
Inc., a Nevada corporation, as more fully described in the Note, and requests
that the certificates for such securities be issued in the name of, and
delivered to, ________________
Whose address is _________________________________________
 
 

Dated:  ________________________     SIGNATURE:          
________________________________________
(Signature must conform in all respects to name
Of Noteholder as specified in the Note)

________________________________________
(Insert Social Security or Federal Tax I.D.
 Number of Noteholder)

IF NOTE IS HELD JOINTLY, BOTH PARTIES
MUST SIGN:

________________________________________
(Signature must conform in all respects to name
Of Noteholder as specified in the Note)

________________________________________
(Insert Social Security or Federal Tax I.D.
 Number of Noteholder)

 
                                                              
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