EXHIBIT 10.3

 

GBS NEVADA PARTNERS, LLC 

6671 Schuster Street 

Las Vegas, Nevada 89118 

viellion@gmail.com

 

702.405.2334 [tel.] 702.293.4414 [fax]    

 

August 17, 2015

 

Via EMAIL: craig@gbsciences.com

 

Craig Ellins 

GB Sciences Nevada, LLC 

6450 Cameron St. 

Suite 110 

Las Vegas, NV 89118

 

BINDING LETTER OF SEPARATION

 

RE:GBS Nevada Partners, LLC
Consignment & Delivery
Agreements

 

Craig:

 

  Pursuant to our recent discussions and in furtherance of the parties mutual
agreement to separate in accordance with the previously executed Binding
Memorandum of Understanding CBMOU’), this letter sets forth and clarifies the
binding general terms and conditions upon which the undersigned parties agree to
separate:

 

1.It is acknowledged by all parties that the BMOU establishes the binding desire
and intent to separate and transfer the Clark County cultivation license and
State certificate and both Clark County and City of Las Vegas dispensary
location licenses and State certificates, with all rights and privileges
thereto, currently held by GB Sciences Nevada LLC as follows (“Transfer”):

 

 

 

 

a.GB Sciences Nevada LLC (“Public Sub”), to be wholly owned by Growblox
Sciences, Inc. after transfer – Clark County cultivation license and State
certificates and related SUP’s and licenses

 

b.GBS Nevada Partners LLC (“Local”)—Both Clark County and City of Las Vegas
dispensary location licenses Clark County and City of Las Vegas dispensary
location licenses, CUP’s and State certificates.

 

 Local shall prepare appropriate Transfer documents which shall be executed by
both parties within two business days of the execution of this Binding Letter of
Separation.

2.Local may, if it so choses in its sole and absolute discretion, and if
required by the State of Nevada and local municipalities for Transfer purposes
described in Item #1, use the entity and name “GB Sciences Nevada, LLC only for
the purpose of holding the MME certificates and licenses, using a registered DBA
or subsequent licensed name for all other commercial purposes.

 

3.Local shall prepare and execute a commercially reasonable Consignment and
Delivery Agreement (“CDA”) to the benefit of GB Sciences Nevada LLC. The CDA
shall be for an initial term of 10 years, with optional extensions for
additional five-year periods, the first of which shall be automatic assuming
neither party is in breach of the CDA, while remaining extensions shall require
mutual execution of the parties. The final CDA shall be reasonably negotiated
between the parties with regard, inter alia, to Items s #4 and #5,below. The
execution of the long’form CDA shall not delay the Transfer pursuant to Item #1.

 

4.The CDA shall provide Public Sub with slotting of 20% of its most prominent
in- store retail merchandising shelf space for consignment sales. All product,
other merchandising, stocking, pricing, advertising and product diversity will
be determined and administered by Public Sub. All after-tax consignment sale
proceeds shall be split 50/50 between Local and Public Sub. Additionally, Local
will work with Public Sub to allow and facilitate customer ordering by EDI
interface with an “App” developed for that purpose by Public Sub, for pickup or
delivery of product pursuant to the terms hereof, so long as such activity fully
comports with applicable state and local laws and regulations.

 

 

 

 

5.The CDA shall further provide that the Public Sub establish and bear all
expenses of operating and administering a local delivery service (“Service”)
within the laws and regulations of the state of Nevada from the dispensary
locations. All Public Sub product sold through the Service shall be treated as a
consignment sale and as such, all after-tax delivery service consignment sale
proceeds shall be split 80/20 between Public Sub and Local. TheService shall
deliver, at its sole option non- Public Sub product sold through the Service
from Local’s County Dispensary and Public Sub shall receive 20% of the retail
sale price thereof.. Public Sub may, in addition at its sole discretion, charge
a commercially reasonable delivery fee to consumer for its Service. Public Sub
shall have the sole right to choose what product will be offered for delivery,
how such product shall be advertised, and in general have sole discretion as to
the operation of the Service. Both parties will cooperate so as to ensure that
neither disrupts the other’s operations and that all operations are consistent
with all applicable regulations. Each party shall provide to the other any
documents, services, or insurance that may be reasonably required to effectuate
the purposes of this agreement.. All efforts will be made to coordinate Service
and dispensary operations in a commercially reasonable manner.

   

6.Public Sub shall receive a non-dilutable 10% interest in the distributions,
profits and equity of any or all entities that own or have the right to 100% of
all dispensary operations, such that, inter alia, Public Sub is an owner of
dispensary operations for the purposes of Nevada state and local regulations.
Public Sub shall have the right, but not the obligation to “tag-along” with any
sale or transfer of any direct or derivative interest in the dispensary
operation on a pari-passu basis. At the option of Local, the voting rights
associated with the interests described herein will be granted to a third party
acceptable to the parties hereto.. These interests will be fonnally documented
by any and all necessary operating, management, and other agreements as may be
appropriate. Such agreements will further provide for the maximal protection of
Public Sub’s minority interests granted hereby. Any monies payable pursuant
hereto will be paid to or at the direction of Public Sub.

 

7.All obligations of the CDA and the terms hereof shall be assumed in writing by
any assignee, transferee, or successor of Local in the City and County
dispensary licenses prior to any such transfer Local agrees in furtherance of
the Separation Agreement between the parties, to include the terms of the CDA
and the terms hereof in all management agreements that pertain to operation of
Local’s City and County dispensaries.

  

 

 

 

8.Local shall reimburse Public Sub $307,413.78 for expenses incurred in
connection with the application and issuance of an approved provisional State
certificate for both the City and County dispensaries. All monies included in
such sum that were paid as deposits on real estate or otherwise shall be paid
immediately upon the governmental approval of the transfers contemplated herein,
in the minimum amount of $61,080. The balance of said expenses shall be
reimbursed from first sale proceeds of dispensary operations but in any event no
later than 2 years from the date the County Dispensary receives its final
certificate of occupancy and opens for business. In the event Local fails to
receive the required State Certificate for the City Dispensary, Local can elect
to defer payment of $153,706.89 for a maximum of an additional 2 years.
Notwithstanding the foregoing, if Local finances the dispensary operations with
a third party such that the principals of local receive net cash proceeds, then
all amounts due pursuant hereto shall become immediately due and payable. In
addition, Local shall assume the outstanding legal bills owed to Moran Brandon
Bendavid Moran Law Firm in the amount of $74,764.36 and agrees to indemnify
Public Sub regarding payment of same to said firm. Moran Brandon Bendavid Moran
Law Finn acknowledges that Public Sub is not liable for this outstanding bill as
evidenced by signature on page 4. Lastly Local and its principals shall assist
Public Sub in recouping any proceeds relating to the once-anticipated “Rainbow”
property.

 

9.All parties recognize that due to the time sensitivity of the subject
certificates and licenses that time is of the essence. The parties therefore
agree to cooperate with each other to complete and execute any government
reporting or filing requirements, or any further documents, necessary to
effectuate the purposes of this document and the BMOU in a timely fashion. All
parties agree to sign the required Transfer applications, and other documents,
within two business days of presentation to each other. Local warrants that all
documents relating to the CDA and operating or management or other agreements
referenced herein will be delivered to Public Sub in fair and reasonable draft
form within 10 days of the execution of this agreement, and that no transfer of
any kind to any third party will be made prior to the execution of acceptable
formal documents implementing the purposes hereof.

 

10.In the event that Local does not raise sufficient capital to timely build out
and begin dispensary operations, Public Sub reserves the right to purchase Local
at an agreed upon appraised price, arrived at by any qualified investment banker
of good repute chosen by the parties together in good faith.

  

11.The parties agree to cooperate with one another to the greatest extent
possible in order to maximize the success of their businesses as are described
herein. To that end, neither party or any principal or associate thereof will
disparage the other party or any principal or associate thereof.

 

 

 

 

  Best Regards,       /s/ James Meservey       James Meservey, Manager
GBS Nevada Partners LLC

 

Accepted this ___ day of August, 2015:     GB Sciences Nevada, LLC     /s/ Craig
Ellins   By: Craig Ellins
Its: Manager     Acknowledged Item #8:     /s/ J.T. Moran   J.T. Moran III,
Managing Partner Moran Brandon Bendavid Moran Law Firm